8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 16, 2008

CLEARWATER PAPER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	001-34146	20-3594554
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

601 West Riverside Ave., Suite 1100

Spokane, WA 99201

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (509) 344-5900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On December 16, 2008, Potlatch Corporation (“Potlatch”) completed the spin-off (the “Spin-off”) of Clearwater Paper Corporation (the “Company”) to Potlatch shareholders. In connection with the Spin-off, the Board of Directors of the Company (the “Board”) approved and adopted new benefit plans to replace benefit plans previously sponsored by Potlatch, and approved and adopted amendments to existing benefit plans of the Company. The material terms of these new or amended benefit plans, as to which the Company’s named executive officers or directors participate, are summarized below.

Clearwater Paper Corporation 2008 Stock Incentive Plan

In connection with the Spin-off, the Board approved and adopted, and Potlatch, in its capacity as the Company’s sole stockholder, approved, the Clearwater Paper Corporation 2008 Stock Incentive Plan (the “2008 Equity Plan”). The 2008 Equity Plan provides for equity-based awards in the form of restricted shares, restricted stock units (“RSUs”), performance shares, stock options, or stock appreciation rights (“SARs”) (collectively, “Equity Awards”) to selected employees, outside directors and consultants of the Company. The 2008 Equity Plan became effective on December 16, 2008.

Stock Subject to 2008 Equity Plan

The 2008 Equity Plan is limited to a maximum distribution of 1,695,000 shares of the Company’s common stock. No more than 226,000 shares may be granted to any one individual in any calendar year from Equity Awards under the 2008 Equity Plan, except during the first year of employment when such limit is 452,000 shares. These aggregate and individual limits may be adjusted as described below under “Adjustments.” Additionally, if an Equity Award expires or becomes unexercisable without being exercised, or if restricted shares, RSUs or performance shares are forfeited to or repurchased by the Company, such shares will again become available for Equity Awards under the 2008 Equity Plan. With respect to SARs, only the number of shares actually issued will reduce the foregoing limits.

Awards Under the 2008 Equity Plan

Restricted Shares. Restricted shares may be sold or awarded under the 2008 Equity Plan on terms set by the Compensation Committee of the Board (“Compensation Committee”), each grant of which will be evidenced by a restricted share agreement. Awards of restricted shares may or may not be subject to vesting or transfer restrictions. The holders of restricted shares will have the same voting, dividend and other rights as the Company’s other stockholders.

Stock Options. Options to purchase the Company’s common stock may be awarded to Company employees pursuant to the 2008 Equity Plan in the form of either an Incentive Stock Option or a nonstatutory employee stock option. Any such options will be evidenced by a stock option agreement setting forth the terms and conditions of the option grant, including the number of shares subject to the option, the exercise date and term of the option, acceleration provisions, if

any, transfer restrictions and the exercise price. In no event will the exercise price be less than the fair market value of a share on the date of the grant. The Company may choose to accept payments of the exercise or purchase price of shares issued under the 2008 Equity Plan in the form of cash, surrendered stock, services rendered, promissory note, loan proceeds or through a broker cashless exercise program or other forms.

SARs. A SAR is the right to receive a payment in cash, stock or a combination thereof equal to the increase in fair market value of the Company’s common stock on the exercise date compared to the grant date. Each grant of a SAR under the 2008 Equity Plan will be evidenced by a SAR agreement setting forth the terms and conditions of the SAR, including the number of shares covered by the grant, the date when the SAR becomes exercisable, acceleration provisions, if any, the exercise price, which will not be less than the fair market value of a share on the date of the grant.

RSUs. RSUs, which are bookkeeping entries representing the Company’s obligation to deliver shares or distribute cash, or a combination thereof, on a future date, do not require cash consideration from a recipient. Each grant of RSUs will be evidenced by a restricted stock unit agreement setting forth the terms and conditions of the RSUs, including vesting conditions and settlement provisions. Predetermined performance factors may increase or decrease the number of RSUs actually eligible for settlement. Holders of RSUs have no voting rights, and may or may not have dividend rights.

Performance Shares. Performance shares, which are also bookkeeping entries representing the Company’s obligation to deliver shares or distribute cash, or a combination thereof, on a future date, will be evidenced by a performance share agreement setting forth the terms and conditions of the performance shares, including the number of shares subject to the award, qualifying performance criteria, the performance period and vesting provisions. Performance shares do not require cash consideration from a recipient. Holders of performance shares have no voting rights, and may or may not have dividend equivalent rights. Predetermined performance factors may increase or decrease the number of performance shares actually eligible for settlement.

Adjustments

The number of shares covered by, and the exercise price of, outstanding awards may be adjusted by the Compensation Committee in the event of a dividend or other distribution, a stock split, a reverse stock split, a split-up, a split-off, a spin-off, a combination or subdivision of shares, an exchange of shares or a similar transaction. All unexercised or unsettled Equity Awards shall terminate immediately upon dissolution or liquidation of the Company. An event constituting a change of control of the Company may also result in the substitution, acceleration, settlement, cancellation of awards made under the 2008 Equity Plan.

Performance

The number of shares or other benefits awarded under the 2008 Equity Plan may be subject to the attainment of one or more performance goals during a time period specified by the Compensation Committee. The performance goals selected by the Compensation Committee may be applied to either the Company or to a business unit, and may based on any of several

financial measures (either individually, alternatively or in any combination) including cash flow (including operating cash flow), earnings per share, earnings before interest, taxes, depreciation and amortization, and other measures. In determining whether any performance goal has been attained, the Compensation Committee may exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) extraordinary nonrecurring items.

Amendment and Termination

The 2008 Equity Plan will automatically terminate on December 1, 2018, but may be amended or terminated earlier by the Board at any time, provided that rights and obligations granted before any such amendment may not be materially impaired.

The foregoing summary of the 2008 Equity Plan does not purport to be complete. The summary is subject to, and qualified in its entirety by, the complete text of the 2008 Equity Plan, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Form of Certain Equity Award Agreements

In connection with the Spin-off, the Company adopted a form of performance share award, RSU award and stock option agreement under the 2008 Equity Plan. Copies of such forms are attached hereto as Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and are incorporated herein by reference.

Clearwater Paper Corporation Annual Incentive Plan

In connection with the Spin-off, the Board adopted, and Potlatch, in its capacity as the Company’s sole stockholder, approved, the Clearwater Paper Corporation Annual Incentive Plan (the “AIP”). The AIP will become effective beginning January 1, 2009.

The AIP will provide eligible employees with annual bonuses that are based on the achievement of one or more performance goals. Eligible employees will include certain Company executives (“covered employees”) whose annual compensation is subject to the $1 million federal income tax deduction cap imposed by Section 162(m) of the Internal Revenue Code (the “Code”). The AIP is intended to qualify for the “performance-based compensation” exception to this deduction cap.

Determination of Bonuses

The Company will determine a target annual bonus pool equal to the sum of the target bonuses for all participants. The target bonuses are established as a percentage of employees’ base salaries, subject to dollar maximums in the case of covered employees, in rules and regulations adopted by the Compensation Committee. The Company will fund the pool based on the Company’s performance against a financial target using any of several financial measures (either individually, alternatively or in any combination) including cash flow (including operating cash

flow), earnings per share, earnings before interest, taxes, depreciation and amortization, and other measures. The Compensation Committee will determine the financial target at the beginning of the year based on the Company’s internal financial plan and forecasts and a review of industry and stockholder expectations. The Company will fund between 0% to 200% of the target bonus pool depending on the Company’s performance against the financial target.

The funded pool will be allocated to the Company’s organizational units based on a methodology determined by the Compensation Committee at the beginning of the each year. The allocations may be adjusted up or down at the discretion of the CEO based on the size of the aggregate funded pool, provided that any adjustment upward cannot affect the covered employees. Bonus pools will then be allocated to AIP participants based on individual performance assessments and their individual target bonus percentages. Individual awards generally will be adjusted proportionally based on the size of the bonus pools, using manager discretion. The share received by covered employees cannot be increased as a result of Compensation Committee discretion, and cannot be increased based on discretion-based reductions in other individuals’ bonuses. In no event can the bonus received by an individual covered employee exceed $1.5 million, or $2.5 million in the case of the CEO.

Eligible participants generally must be employed by the Company or its subsidiaries through the end of a performance year in order to receive a bonus award payment, but a pro rata award may be approved in the event of death, disability or retirement during the performance year. Individual awards earned under the AIP will be made in cash. However, if the participant has not met the Company’s stock ownership guidelines, half of the payment will be made in the Company’s common stock issued under the 2008 Equity Plan.

Administration and Amendment

As it applies to covered employees, the Compensation Committee will administer and have the authority to interpret the AIP. The Compensation Committee will be responsible for determining target bonuses, the financial targets and ranges for minimum and maximum performance with respect to the bonus pool, certifying performance with respect to those targets in the case of covered employees, and making final determinations of annual incentive payments for covered employees and other executive officers.

The Board or the Compensation Committee may at any time amend, suspend or terminate the AIP, subject to stockholder approval to the extent required under Section 162(m).

The foregoing summary of the AIP does not purport to be complete. The summary is subject to, and qualified in its entirety by, the complete text of the AIP, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.

Clearwater Paper Corporation Management Deferred Compensation Plan

In connection with the Spin-off, the Board approved and adopted the Clearwater Paper Corporation Management Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan became effective on December 16, 2008. All employees who

are in a position that is eligible for long-term incentive awards may participate in the Deferred Compensation Plan to defer base salary and awards under the AIP. Deferrals previously made by Company employees under Potlatch deferred compensation plans will be transferred to the Deferred Compensation Plan after the Spin-off.

Under the Deferred Compensation Plan, after deferring the maximum amount under his or her 401(k) plan, a participant may elect to defer up to 50% of his or her base salary. In addition, participants can defer between 50% to 100% of any incentive award under the AIP. Each participant may elect a lump-sum payout or installment payments over five, ten, or fifteen years after separation from service. Deferred amounts are credited as bookkeeping entries to the participant’s deferral account. Each participant is always 100% vested in his or her deferral account.

A participant may select among various investment options upon which the rate of return on deferred amounts will be based. The participant’s investment account is adjusted periodically to reflect the deemed gains and losses attributable to the deferred amount. Alternatively, each participant may elect to allocate some or all of the deferred amount to a phantom stock unit deferral account, the value of which is based on the Company’s common stock. All payments of deferrals under the phantom stock unit deferral account are made in cash.

The foregoing summary of the Deferred Compensation Plan does not purport to be complete. The summary is subject to, and qualified in its entirety by, the complete text of the Deferred Compensation Plan, a copy of which is attached as Exhibit 10.6 and is incorporated herein by reference.

Clearwater Paper Corporation Severance Program for Executive Employees

In connection with the Spin-off, the Board approved and adopted an amendment and restatement of the Clearwater Paper Corporation Severance Program for Executive Employees (the “Severance Program”), formerly known as the Potlatch Forest Products Corporation Severance Program for Executive Employees. The amended and restated Severance Program became effective on December 16, 2008. The amendments include (1) elimination of coverage of Potlatch executives, who will be covered by a separate Potlatch plan after the Spin-off; (2) update and clarification of the definition of “change of control,” which determines the level of severance benefits and affects the Company’s ability to amend the Severance Program; (3) clarification of the definition of “misconduct,” which may cause an executive to forfeit certain severance benefits; and (4) updates necessary to comply with Section 409A of the Code.

The Severance Program provides for the payment to eligible employees of the Company of severance payments upon certain events including (i) an involuntary separation from service or (ii) an involuntary separation from service within 24 months of a change of control. Eligible employees are all executive officers and such other employees who are designated by the Compensation Committee.

With respect to payments triggered prior to a change in control, the payments will consist of (a) three weeks’ of the employee’s base compensation for each full year of service completed by

such eligible employee in effect at the time of the separation from service, but not exceeding one year of base compensation, payable in monthly installments over a period not to exceed twelve months, (b) the eligible employee’s unused and accrued vacation pay, (c) an award bonus under the AIP for the award year in which the eligible employee separates from service and (d) continued coverage under the Company’s medical, dental and life insurance plans for a period of weeks equal to three times the number of full years of service completed by the eligible employee, but not exceeding one year of coverage. The Compensation Committee may increase the benefits payable.

With respect to payments triggered following a change in control, the payments will consist of a lump sum cash benefit equal to (a) the eligible employee’s annual base compensation plus his or her annual base compensation multiplied by his or her standard bonus percentage (as determined pursuant to the AIP), determined as of the date of the change of control or the date the eligible employee separates from service, whichever produces the larger amount, multiplied by 2.5, or in the case of the CEO, a factor of 3.0, (b) the eligible employee’s unused and accrued vacation pay, (c) a bonus award under the AIP for the award year in which the eligible employee separates from service, and (d) COBRA premium payments for up to three years.

The Compensation Committee may amend or terminate the Severance Program, subject to certain restrictions with respect to eligibility for change of control benefits.

The foregoing summary of the Severance Program does not purport to be complete. The summary is subject to, and qualified in its entirety by, the complete text of the Severance Program, a copy of which is attached as Exhibit 10.7 and is incorporated herein by reference.

Clearwater Paper Corporation Salaried Supplemental Benefit Plan

In connection with the Spin-off, the Board approved and adopted an amendment and restatement of the Clearwater Paper Corporation Salaried Supplemental Benefit Plan (the “Supplemental Plan”), formerly known as the Potlatch Forest Products Corporation Supplemental Benefit Plan II. The amended and restated Supplemental Plan became effective on December 16, 2008.The amendments to the Supplemental Plan include (1) elimination of coverage of Potlatch employees, and transfer to a separate Potlatch plan of the supplemental benefit liabilities for Potlatch employees; (2) transfer from a Potlatch plan of certain supplemental benefit liabilities for Company employees; (3) update and clarification of the definition of “change of control,” which requires appointment of an independent committee to administer the Supplemental Plan; (4) revisions to the deemed investment options available for 401(k) supplemental benefits; and (5) updates necessary to comply with Section 409A of the Code.

The Supplemental Plan provides certain salaried employees with supplemental retirement benefits by providing both a pension benefit that supplements the Company’s Salaried Retirement Plan (the “Retirement Plan Supplement”), and a savings plan benefit that supplements the Company’s Salaried 401(k) Plan (the “401(k) Plan Supplement”).

The Retirement Plan Supplement generally consists of the difference between (1) the participant’s actual vested benefit under the Company’s Salaried Retirement Plan and (2) the

vested benefit that would have been calculated under the Salaried Retirement Plan if certain Code limitations did not apply and if deferred bonuses under the AIP and predecessor annual bonus plans were taken into account. The Retirement Plan Supplement is generally payable as an annuity, but will be paid as a lump sum if the lump sum value does not exceed $50,000. Payment of the Retirement Plan Supplement begins (or is made, in the case of a lump sum) within 90 days after the later of the participant’s attainment of age 55 or separation from service.

The 401(k) Plan Supplement applies to participants who have contributed at least 6% of their eligible compensation to the Company’s Salaried 401(k) Plan (which contributions are eligible for Company matching contributions of 70% of the participant’s contributions), and whose additional contributions under that plan have been reduced because of certain Code limitations or because the participant has deferred annual bonuses payable under the AIP or predecessor bonus plans. The 401(k) Plan Supplement consists of the difference between (1) the actual Company matching contributions allocated to the participant under the Salaried 401(k) Plan, and (2) the amount of Company matching contributions that would have been allocated had the participant contributed 6% of his or her compensation to the Salaried 401(k) Plan, disregarding for this purpose any Code limits on eligible compensation and any deferrals of annual bonuses payable under the AIP or predecessor bonus plans.

The 401(k) Plan Supplement amounts that accrue each year are credited to a bookkeeping account, and are deemed invested in one or more investment options. The account will initially be deemed to be solely an interest-bearing investment, but during 2009 the Company expects to permit deemed investments that mirror the investment options in the Salaried 401(k) Plan (other than Company stock). The participant can elect to have the 401(k) Plan Supplement account paid in a lump sum or in ten or fewer annual installments, beginning in the calendar year following the year in which the participant separates from service.

The Compensation Committee may amend or terminate the Supplemental Plan at any time.

The foregoing summary of the Supplemental Plan does not purport to be complete. The summary is subject to, and qualified in its entirety by, the complete text of the Supplemental Plan, a copy of which is attached hereto as Exhibit 10.8 and is incorporated herein by reference.

Clearwater Paper Corporation Benefits Protection Trust Agreement

In connection with the Spin-off, the Board adopted and approved the Clearwater Paper Corporation Benefits Protection Trust Agreement (the “Trust”) with U.S. Bank National Association. The Trust became effective on December 16, 2008. The purpose of the Trust is to assure that future payments of amounts owed under the Company’s nonqualified plans, programs and policies will not be improperly withheld in the event of a change of control of the Company.

The Trust provides that in the event of a change of control of the Company, the Trust will become irrevocable and within thirty days of the change of control the Company will deposit with the trustee enough assets to ensure that the total assets held by the Trust are sufficient to cover any anticipated trust expenses and to guarantee payment of the benefits payable to the Company’s employees under the Company’s various employee benefit plans and employee agreements. At least annually, an actuary will be retained to re-determine the benefit

commitments and expected fees. If the Trust assets do not equal or exceed 110% of the re-determined amount, then the Company is, or the Company’s successor is, obligated to deposit additional assets into the Trust.

The foregoing summary of the Trust does not purport to be complete. The summary is subject to, and qualified in its entirety by, the complete text of the Trust, a copy of which is attached hereto as Exhibit 10.9 and is incorporated herein by reference.

Clearwater Paper Corporation Deferred Compensation Plan for Directors

In connection with the Spin-off, the Board adopted the Clearwater Paper Corporation Deferred Compensation Plan for Directors (the “Directors Plan”). The Directors Plan, which became effective on December 16, 2008, provides non-employee directors of the Company an opportunity to defer payment of director fees. The Directors Plan also permits the grant to directors of discretionary awards that are deemed invested in Company common stock units.

When a non-employee director elects to defer director fees, he or she elects to have those fees converted into Company common stock units or, if not converted, then credited with annual interest at 120% of the long-term applicable federal rate published by the Internal Revenue Service, with quarterly compounding. The common stock units are credited with amounts in common stock units equal in value to the dividends that are paid on the same amount of common stock. When a director elects to defer fees, he or she also elects whether settlement is to be made in a single lump sum or in a series of approximately equal installments over a period of years, which is specified by the director (but in no event more than fifteen years).

Each non-employee director may also be granted a discretionary annual award under the Directors Plan, consisting of a credit to an account established on behalf of each outside director under the Directors Plan. These awards are credited to an account for the director in common stock units, based on the price of the common stock on the date of the grant. These common stock units are then credited with amounts in common stock units equal in value to the dividends that are paid on the same amount of common stock. Upon separation from service as a director, the common stock units held by the director in his or her deferred account will be converted to cash based upon the then market price of the common stock and will be paid to the director.

The foregoing summary of the Directors Plan does not purport to be complete. The summary is subject to, and is qualified in its entirety by, the complete text of the Directors Plan, a copy of which is attached hereto as Exhibit 10.10 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

10.1	Clearwater Paper Corporation 2008 Stock Incentive Plan
10.2	2008 Stock Incentive Plan - Form of Performance Share Award
10.3	2008 Stock Incentive Plan - Form of Restricted Stock Unit Award
10.4	2008 Stock Incentive Plan - Form of Stock Option Agreement
10.5	Clearwater Paper Corporation Annual Incentive Plan
10.6	Clearwater Paper Corporation Management Deferred Compensation Plan
10.7	Clearwater Paper Corporation Severance Program for Executive Employees
10.8	Clearwater Paper Corporation Salaried Supplemental Benefit Plan
10.9	Clearwater Paper Corporation Benefits Protection Trust Agreement
10.10	Clearwater Paper Corporation Deferred Compensation Plan for Directors

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 19, 2008

CLEARWATER PAPER CORPORATION
By:	/s/ Michael S. Gadd
	Michael S. Gadd, Corporate Secretary

EXHIBIT INDEX

Exhibit	Description of Exhibit
10.1	Clearwater Paper Corporation 2008 Stock Incentive Plan
10.2	2008 Stock Incentive Plan - Form of Performance Share Award
10.3	2008 Stock Incentive Plan - Form of Restricted Stock Unit Award
10.4	2008 Stock Incentive Plan - Form of Stock Option Agreement
10.5	Clearwater Paper Corporation Annual Incentive Plan
10.6	Clearwater Paper Corporation Management Deferred Compensation Plan
10.7	Clearwater Paper Corporation Severance Program for Executive Employees
10.8	Clearwater Paper Corporation Salaried Supplemental Benefit Plan
10.9	Clearwater Paper Corporation Benefits Protection Trust Agreement
10.10	Clearwater Paper Corporation Deferred Compensation Plan for Directors

2

EX-10.1

Exhibit 10.1

CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

(Adopted by the Board of Directors on December 2, 2008)

CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

Table of Contents

		Page
SECTION 1.	ESTABLISHMENT AND PURPOSE	1
SECTION 2.	DEFINITIONS	1
(a)	“Affiliate”	1
(b)	“Award”	1
(c)	“Board of Directors”	1
(d)	“Business Combination”	1
(e)	“Change of Control”	1
(f)	“Code”	3
(g)	“Committee”	3
(h)	“Corporate Transaction”	3
(i)	“Corporation”	3
(j)	“Consultant”	3
(k)	“Distribution”	3
(l)	“Employee”	3
(m)	“Exchange Act”	3
(n)	“Exercise Price”	3
(o)	“Fair Market Value”	4
(p)	“Incumbent Board”	4
(q)	“ISO”	4
(r)	“Nonstatutory Option” or “NSO”	4
(s)	“Offeree”	4
(t)	“Option”	4
(u)	“Optionee”	4
(v)	“Outside Director”	4
(w)	“Outstanding Common Stock”	4
(x)	“Outstanding Voting Securities”	4
(y)	“Parent”	5
(z)	“Participant”	5
(aa)	“Performance Shares”	5
(bb)	“Performance Share Agreement”	5
(cc)	“Person”	5
(dd)	“Plan”	5
(ee)	“Purchase Price”	5

CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

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(ff)	“Qualifying Performance Criteria”	5
(gg)	“Restricted Share”	5
(hh)	“Restricted Share Agreement”	5
(ii)	“Restricted Stock Unit”	5
(jj)	“Restricted Stock Unit Agreement”	5
(kk)	“SAR”	5
(ll)	“SAR Agreement”	5
(mm)	“Service”	6
(nn)	“Share”	6
(oo)	“Stock”	6
(pp)	“Stock Option Agreement”	6
(qq)	“Subsidiary”	6
SECTION 3.	ADMINISTRATION	6
(a)	Committee Composition	6
(b)	Committee for Non-Officer Grants	6
(c)	Committee Responsibilities	7
SECTION 4.	ELIGIBILITY	8
(a)	General Rule	8
(b)	Ten-Percent Stockholders	8
(c)	Attribution Rules	8
(d)	Outstanding Stock	8
SECTION 5.	STOCK SUBJECT TO PLAN	8
(a)	Basic Limitation	8
(b)	Award Limitation	9
(c)	Additional Shares	9
SECTION 6.	RESTRICTED SHARES	9
(a)	Restricted Share Agreement	9
(b)	Payment for Awards	9
(c)	Vesting	9
(d)	Voting and Dividend Rights	10
(e)	Restrictions on Transfer of Shares	10
SECTION 7.	TERMS AND CONDITIONS OF OPTIONS	10
(a)	Stock Option Agreement	10
(b)	Number of Shares	10
(c)	Exercise Price	10
(d)	Withholding Taxes	10
(e)	Exercisability and Term	10

CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

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(f)	Exercise of Options	11
(g)	Effect of Change of Control	11
(h)	No Rights as a Stockholder	11
(i)	Restrictions on Transfer of Shares	11
(j)	Buyout Provisions	11
SECTION 8.	PAYMENT FOR SHARES	11
(a)	General Rule	11
(b)	Surrender of Stock	11
(c)	Services Rendered	12
(d)	Cashless Exercise	12
(e)	Exercise/Pledge	12
(f)	Promissory Note	12
(g)	Other Forms of Payment	12
(h)	Limitations under Applicable Law	12
SECTION 9.	STOCK APPRECIATION RIGHTS	12
(a)	SAR Agreement	12
(b)	Number of Shares	12
(c)	Exercise Price	13
(d)	Exercisability and Term	13
(e)	Effect of Change of Control	13
(f)	Exercise of SARs	13
(g)	Modification or Assumption of SARs	13
(h)	Buyout Provisions	13
SECTION 10.	RESTRICTED STOCK UNITS	13
(a)	Restricted Stock Unit Agreement	13
(b)	Payment for Awards	14
(c)	Vesting Conditions	14
(d)	Voting and Dividend Rights	14
(e)	Form and Time of Settlement of Restricted Stock Units	14
(f)	Death of Recipient	14
(g)	Creditors’ Rights	15
SECTION 11.	PERFORMANCE SHARES	15
(a)	Performance Shares and Performance Share Agreement	15
(b)	Payment for Awards	15
(c)	Terms of Performance Share Awards	15
(d)	Voting and Dividend Rights	15
(e)	Form and Time of Settlement of Performance Shares	15

CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

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(f)	Death of Recipient	16
(g)	Creditors’ Rights	16
SECTION 12.	ADJUSTMENT OF SHARES; CORPORATE TRANSACTIONS	16
(a)	Adjustments	16
(b)	Dissolution or Liquidation	16
(c)	Corporate Transactions	17
(d)	Reservation of Rights	18
SECTION 13.	DEFERRAL OF AWARDS	18
(a)	Committee Powers	18
(b)	General Rules	19
SECTION 14.	AWARDS UNDER OTHER PLANS	19
SECTION 15.	LEGAL AND REGULATORY REQUIREMENTS	19
SECTION 16.	WITHHOLDING TAXES	19
(a)	General	19
(b)	Share Withholding	19
SECTION 17.	OTHER PROVISIONS APPLICABLE TO AWARDS	20
(a)	Transferability	20
(b)	Qualifying Performance Criteria	20
(c)	Clawback	21
SECTION 18.	NO EMPLOYMENT RIGHTS	21
SECTION 19.	APPLICABLE LAW	21
SECTION 20.	DURATION AND AMENDMENTS	21
(a)	Term of the Plan	21
(b)	Right to Amend or Terminate the Plan	21
(c)	Effect of Termination	21
SECTION 21.	EXECUTION	22

CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

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CLEARWATER PAPER CORPORATION

2008 STOCK INCENTIVE PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Board of Directors on December 2, 2008, and shall be effective on the date of the Distribution. The purpose of the Plan is to promote the long-term success of the Corporation and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Restricted Stock Units, Performance Shares, Options (which may constitute ISOs or NSOs) and SARs.

SECTION 2. DEFINITIONS.

(a) “Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation.

(b) “Award” shall mean any award of an Option, a SAR, Restricted Shares, Restricted Stock Units or Performance Shares under the Plan.

(c) “Board of Directors” shall mean the Board of Directors of the Corporation, as constituted from time to time.

(d) “Business Combination” shall mean a merger or consolidation involving the Corporation.

(e) “Change of Control” shall mean the occurrence of any of the following events:

(i) Upon consummation of a Business Combination unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock (or common equity) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

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(B) no Person (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or a Subsidiary or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock (or common equity) of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors (or similar governing body) of the corporation or other entity resulting from such Business Combination were members of the Board of Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

(ii) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

(iii) On the date that individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board of Directors on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board of Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board of Directors occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board of Directors, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of any Person other than the Incumbent Board; or

(iv) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either:

(A) the then Outstanding Common Stock, or

(B) the combined voting power of the Outstanding Voting Securities; provided, however, that the following acquisitions shall not be deemed to be covered by this subparagraph (iv):

(x) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by or at the direction of the Corporation or any Subsidiary,

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(y) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary, or

(z) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2(e)(i) of this Plan; or

(v) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(g) “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

(h) “Corporate Transaction” shall mean an event that constitutes a “Change of Control” pursuant to subsection (i), subsection (ii) or subsection (iv) of Section 2(e); provided, however, that solely for purposes of this definition, the words “30% or more” in subsection (iv) of Section 2(e) shall be replaced with the words “more than 50%”.

(i) “Corporation” shall mean Clearwater Paper Corporation, a Delaware corporation.

(j) “Consultant” shall mean a consultant or advisor who provides bona fide services to the Corporation, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

(k) “Distribution” shall mean the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the Stock then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between the Corporation and Potlatch Corporation.

(l) “Employee” shall mean any individual who is a common-law employee of the Corporation, a Parent, a Subsidiary or an Affiliate.

(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(n) “Exercise Price” shall mean (a) in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement (or the addendum thereto), and (b) in the case of a SAR, an amount, as specified in the applicable SAR Agreement (or the addendum thereto), which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

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(o) “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

(i) If the Stock is listed on the New York Stock Exchange or another national securities exchange, or is traded on the NASDAQ National Market or the NASDAQ SmallCap Market and sales prices are regularly reported for the Stock, then the Fair Market Value shall be the closing selling price for the Stock reported on the applicable composite tape or other comparable reporting system on the applicable date, or if the applicable date is not a trading day, on the most recent trading day immediately prior to the applicable date; or

(ii) If closing selling prices are not regularly reported for the Stock as described in clause (i) but bid and asked prices for the Stock are regularly reported, then the Fair Market Value shall be the arithmetic mean between the closing or last bid and asked prices for the Stock on the applicable date or, if the applicable date is not a trading day, on the most recent trading day immediately prior to the applicable date; or

(iii) If prices are not regularly reported for the Stock as described in clause (i) or (ii) above, then the Fair Market Value shall be such value as the Committee in good faith determines.

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

(p) “Incumbent Board” shall mean the individuals who constitute the Board of Directors as of 11:59 p.m. (Pacific) on the date of the Distribution.

(q) “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

(r) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

(s) “Offeree” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).

(t) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

(u) “Optionee” shall mean an individual or estate who holds an Option or SAR.

(v) “Outside Director” shall mean a member of the Board of Directors who is not an Employee or a Consultant.

(w) “Outstanding Common Stock” shall mean the outstanding shares of Stock.

(x) “Outstanding Voting Securities” shall mean the outstanding voting securities of the Corporation entitled to vote generally in the election of members of the Board of Directors.

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(y) “Parent” shall mean any corporation or other entity (other than the Corporation) in an unbroken chain of corporations or other entities ending with the Corporation, if each of the corporations or other entities other than the Corporation owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation or other entity that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

(z) “Participant” shall mean an individual or estate who holds an Award.

(aa) “Performance Shares” shall mean a bookkeeping entry representing the Corporation’s obligation to deliver Shares (or distribute cash) on a future date in accordance with the provisions of a Performance Share Agreement.

(bb) “Performance Share Agreement” shall mean the agreement between the Corporation and the recipient of Performance Shares that contains the terms, conditions and restrictions pertaining to such Performance Shares.

(cc) “Person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

(dd) “Plan” shall mean this 2008 Stock Incentive Plan of Clearwater Paper Corporation, as amended from time to time.

(ee) “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

(ff) “Qualifying Performance Criteria” shall have the meaning set forth in Section 17(d).

(gg) “Restricted Share” shall mean a Share awarded under the Plan and subject to the terms, conditions and restrictions set forth in a Restricted Share Agreement.

(hh) “Restricted Share Agreement” shall mean the agreement between the Corporation and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Shares.

(ii) “Restricted Stock Unit” shall mean a bookkeeping entry representing the Corporation’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Restricted Stock Unit Agreement.

(jj) “Restricted Stock Unit Agreement” shall mean the agreement between the Corporation and the recipient of a Restricted Stock Unit that contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit.

(kk) “SAR” shall mean a stock appreciation right granted under the Plan.

(ll) “SAR Agreement” shall mean the agreement between the Corporation and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR.

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(mm) “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Stock Option Agreement, SAR Agreement, Restricted Share Agreement, Restricted Stock Unit Agreement or Performance Share Agreement. Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Corporation in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Corporation shall be entitled to determine in its sole discretion which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.

(nn) “Share” shall mean one share of Stock.

(oo) “Stock” shall mean the common stock of the Corporation, par value $0.0001 per share.

(pp) “Stock Option Agreement” shall mean the agreement between the Corporation and an Optionee that contains the terms, conditions and restrictions pertaining to such Option.

(qq) “Subsidiary” shall mean any corporation or other entity, if the Corporation or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock (or equity) of such corporation or other entity. A corporation or other entity that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

SECTION 3. ADMINISTRATION.

(a) Committee Composition. The Plan shall be administered by the Board of Directors or a Committee appointed by the Board of Directors. The Committee shall consist of two or more members of the Board of Directors. In addition, to the extent required by the Board of Directors, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code.

(b) Committee for Non-Officer Grants. The Board of Directors may also appoint one or more separate committees of the Board of Directors, each composed of one or more members of the Board of Directors who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Corporation under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the

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Board of Directors may also authorize one or more officers of the Corporation to designate Employees, other than persons subject to Section 16 of the Exchange Act, to receive Awards and to determine the number of such Awards to be received by such Employees; provided, however, that the Board of Directors shall specify the aggregate limit (i.e., the number of Shares underlying all such Awards) and the individual limit (i.e., the number of Shares underlying any individual Award so granted) that such officer or officers may so award in any calendar year.

(c) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

(i) To interpret the Plan and to apply its provisions;

(ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan;

(iii) To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws, including qualifying for preferred tax treatment under applicable foreign tax laws;

(iv) To authorize any person to execute, on behalf of the Corporation, any instrument required to carry out the purposes of the Plan;

(v) To determine when Awards are to be granted under the Plan;

(vi) To select the Offerees and Optionees;

(vii) To determine the number of Shares to be made subject to each Award;

(viii) To prescribe the terms and conditions of each Award, including the Exercise Price, the Purchase Price, the performance criteria, the performance period, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

(ix) To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

(x) To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

(xi) To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

(xii) To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

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(xiii) To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement;

(xiv) To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

(xv) To take any other actions deemed necessary or advisable for the administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants, and all persons deriving their rights from a Participant. No member of the Committee shall be liable for any action that he or she has taken or has failed to take in good faith with respect to the Plan or any Award.

SECTION 4. ELIGIBILITY.

(a) General Rule. Only Employees shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Restricted Shares, Restricted Stock Units, Performance Shares, Nonstatutory Options or SARs.

(b) Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Corporation, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

(c) Attribution Rules. For purposes of Section 4(b) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

(d) Outstanding Stock. For purposes of Section 4(b) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant but shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

SECTION 5. STOCK SUBJECT TO PLAN.

(a) Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 1,695,000 Shares. The limitation of this Section 5(a) shall be

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subject to adjustment pursuant to Section 12. The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Corporation, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

(b) Award Limitation. Subject to the provisions of Section 12, no Participant may receive Awards under the Plan (i) in any calendar year (other than the calendar year of the first year of employment) that relate to more than 226,000 Shares, and (ii) in the calendar year for the first year of employment, no more than two times the amount set forth in Section 5(b)(i).

(c) Additional Shares. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Shares, Restricted Stock Units or Performance Shares, is forfeited to or repurchased by the Corporation due to failure to vest, the unpurchased Shares (or for Awards other than Options or SARs the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to SARs, only Shares actually issued pursuant to a SAR will cease to be available under the Plan; all remaining Shares under SARs will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Shares, Restricted Stock Units or Performance Shares are repurchased by the Corporation or are forfeited to the Corporation, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

SECTION 6. RESTRICTED SHARES.

(a) Restricted Share Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Agreement between the recipient and the Corporation. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Agreements entered into under the Plan need not be identical.

(b) Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including cash, cash equivalents, full-recourse promissory notes, past services and future services.

(c) Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Agreement. A Restricted Share Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested upon a Change of Control. Except as may be set forth in a

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Restricted Share Agreement, vesting of the Restricted Shares shall cease on the termination of the Participant’s Service.

(d) Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Corporation’s other stockholders. A Restricted Share Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.

(e) Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Corporation. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option (subject to adjustment in accordance with Section 12).

(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(b), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.

(d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Corporation may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Corporation may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

(e) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided, however, that the term of an ISO

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shall in no event exceed 10 years from the date of grant (five years for Employees described in Section 4(b)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

(f) Exercise of Options. Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Corporation and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

(g) Effect of Change of Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option upon a Change of Control.

(h) No Rights as a Stockholder. An Optionee, or a permitted transferee of an Optionee, shall have no rights as a stockholder of the Corporation with respect to any Shares covered by the Option until the date of the issuance of the Shares underlying the Option upon a valid exercise thereof.

(i) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

(j) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

SECTION 8. PAYMENT FOR SHARES.

(a) General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below.

(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative. Such Shares shall be

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valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Corporation to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

(c) Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Corporation or a Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(b).

(d) Cashless Exercise. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Corporation in payment of the aggregate Exercise Price.

(e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Corporation in payment of the aggregate Exercise Price.

(f) Promissory Note. To the extent that a Stock Option Agreement or Restricted Share Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Corporation) a full-recourse promissory note.

(g) Other Forms of Payment. To the extent that a Stock Option Agreement or Restricted Share Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

(h) Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Agreement or Restricted Share Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

SECTION 9. STOCK APPRECIATION RIGHTS.

(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Corporation. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12.

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(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Share on the date of grant. A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding.

(d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events. Except as may be set forth in a SAR Agreement, vesting of the SAR shall cease on the termination of the Participant’s Service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change of Control.

(e) Effect of Change of Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Shares subject to such SAR upon a Change of Control.

(f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Corporation (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

(g) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Corporation or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

(h) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize an Optionee to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

SECTION 10. RESTRICTED STOCK UNITS.

(a) Restricted Stock Unit Agreement. Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the recipient and the Corporation. Such Restricted Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be identical.

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Restricted Stock Units may be granted in consideration of a reduction in the recipient’s other compensation.

(b) Payment for Awards. To the extent that an Award is granted in the form of Restricted Stock Units, no cash consideration shall be required of the Award recipients.

(c) Vesting Conditions. Each Award of Restricted Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Unit Agreement. A Restricted Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Stock Units or thereafter, that all or part of such Restricted Stock Units shall become vested in the event that a Change of Control occurs with respect to the Corporation.

(d) Voting and Dividend Rights. The holders of Restricted Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Restricted Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Stock Unit is outstanding. Dividend equivalents may be converted into additional Restricted Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Restricted Stock Units to which they attach.

(e) Form and Time of Settlement of Restricted Stock Units. Settlement of vested Restricted Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Restricted Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Restricted Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Restricted Stock Unit Agreement may provide that vested Restricted Stock Units may be settled in a lump sum or in installments. A Restricted Stock Unit Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Restricted Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Restricted Stock Units is settled, the number of such Restricted Stock Units shall be subject to adjustment pursuant to Section 12.

(f) Death of Recipient. Any Restricted Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of Restricted Stock Units under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Corporation. A beneficiary designation may be changed by filing the prescribed form with the Corporation at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Restricted Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s estate.

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(g) Creditors’ Rights. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Corporation. Restricted Stock Units represent an unfunded and unsecured obligation of the Corporation, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.

SECTION 11. PERFORMANCE SHARES.

(a) Performance Shares and Performance Share Agreement. Each grant of Performance Shares under the Plan shall be evidenced by a Performance Share Agreement between the recipient and the Corporation. Such Performance Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Performance Share Agreements entered into under the Plan need not be identical. Performance Shares may be granted in consideration of a reduction in the recipient’s other compensation.

(b) Payment for Awards. To the extent that an Award is granted in the form of Performance Shares, no cash consideration shall be required of the Award recipients.

(c) Terms of Performance Share Awards. The Committee may determine the terms of Performance Share Awards, all of which shall be subject to Section 17(b) of the Plan. Each Performance Share Agreement shall set forth the number of Shares subject to such Performance Share Award, the Qualifying Performance Criteria and the performance period. Except as otherwise provided in the Performance Share Agreement, the Performance Share Award shall terminate upon the termination of the Participant’s Service. Prior to settlement and in accordance with Section 17(b) of the Plan, the Committee shall determine the extent to which Performance Shares have been earned. Performance periods may overlap and the holders may participate simultaneously with respect to Performance Shares Awards that are subject to different performance periods and different Qualifying Performance Criteria. The number of Shares may be fixed or may vary in accordance with such Qualifying Performance Criteria as may be determined by the Committee. A Performance Share Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Performance Share Awards or thereafter, that all or part of the Performance Shares shall become vested upon a Change of Control.

(d) Voting and Dividend Rights. The holders of Performance Shares shall have no voting rights with respect to such Performance Shares. Prior to settlement or forfeiture, any Performance Share awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Performance Share is outstanding. Dividend equivalents may be converted into additional Performance Shares. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Performance Shares to which they attach.

(e) Form and Time of Settlement of Performance Shares. Settlement of Performance Shares may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as

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determined by the Committee and set forth in the Performance Share Agreements. The actual number of Performance Shares eligible for settlement may be larger or smaller than the number included in the original Award, based on the Qualifying Performance Criteria. Methods of converting Performance Shares into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Performance Share Agreement may provide that Performance Shares may be settled in a lump sum or in installments. A Performance Share Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Performance Shares have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Performance Shares is settled, the number of such Performance Shares shall be subject to adjustment pursuant to Section 12.

(f) Death of Recipient. Any Performance Share Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Performance Share Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Corporation. A beneficiary designation may be changed by filing the prescribed form with the Corporation at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Performance Share Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate.

(g) Creditors’ Rights. A holder of Performance Shares shall have no rights other than those of a general creditor of the Corporation. Performance Shares represent an unfunded and unsecured obligation of the Corporation, subject to the terms and conditions of the applicable Performance Share Agreement.

SECTION 12. ADJUSTMENT OF SHARES; CORPORATE TRANSACTIONS.

(a) Adjustments. In the event that there occurs a dividend or other distribution of Shares, a dividend in the form of cash or other property that materially affects the Fair Market Value of the Shares, a stock split, a reverse stock split, a split-up, a split-off, a spin-off, a combination or subdivision of Shares or other securities of the Corporation, an exchange of Shares for other securities of the Corporation, or a similar transaction or event that materially affects the Fair Market Value of the Shares, the Committee, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall make appropriate adjustments in:

(i) The numerical limitations set forth in Sections 5(a) and (b);

(ii) The number of Shares covered by all outstanding Awards; and

(iii) The Exercise Price under each outstanding Option and SAR.

(b) Dissolution or Liquidation. To the extent not previously exercised or settled, all outstanding Awards shall terminate immediately prior to the dissolution or liquidation of the Corporation.

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(c) Corporate Transactions. In the event of a Corporate Transaction, subject to any vesting acceleration provisions in an Award agreement, outstanding Awards shall be treated in the manner provided in the agreement relating to the Corporate Transaction (including as the same may be amended). Such agreement shall not be required to treat all Awards or individual types of Awards similarly in the Corporate Transaction; provided, however, that such agreement shall provide for one of the following with respect to all outstanding Awards (as applicable):

(i) The continuation of the outstanding Award by the Corporation, if the Corporation is a surviving corporation;

(ii) The assumption of the outstanding Award by the surviving corporation or its parent or subsidiary;

(iii) The substitution by the surviving corporation or its parent or subsidiary of its own award for the outstanding Award;

(iv) Full exercisability or vesting and accelerated expiration of the outstanding Award, followed by the cancellation of such Award;

(v) The cancellation of an outstanding Option or SAR and a payment to the Optionee equal to the excess of (i) the Fair Market Value of the Shares subject to such Option or SAR (whether or not such Option or SARs is then exercisable or such Shares are then vested) as of the closing date of such Corporate Transaction over (ii) its aggregate Exercise Price. Such payment may be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Such payment may be made in installments and may be deferred until the date or dates when such Option or SAR would have become exercisable or such Shares would have vested. Such payment may be subject to vesting based on the Optionee’s continuing Service, provided that the vesting schedule shall not be less favorable to the Optionee than the schedule under which such Option or SAR would have become exercisable or such Shares would have vested (including any vesting acceleration provisions). If the Exercise Price of the Shares subject to any Option or SAR exceeds the Fair Market Value of the Shares subject thereto, then such Option or SAR may be cancelled without making a payment to the Optionee with respect thereto. For purposes of this Subsection (v), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security;

(vi) The cancellation of an outstanding Restricted Stock Unit and a payment to the Participant equal to the Fair Market Value of the Shares subject to such Restricted Stock Unit (whether or not such Restricted Stock Unit is then vested) as of the closing date of such Corporate Transaction. Such payment may be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Such payment may be made in installments and may be deferred until the date or dates when such Restricted Stock Unit would have vested. Such payment may be subject to vesting based on the Participant’s continuing Service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which such Restricted Stock Unit would have vested (including

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any vesting acceleration provisions). For purposes of this Subsection (vi), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security; or

(vii) The cancellation of an outstanding Performance Share Award and a payment to the Participant equal to the Fair Market Value of the target Shares subject to such Performance Share Award (whether or not such Performance Share Award is then vested) as of the closing date of such Corporate Transaction. Such payment may be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Such payment may be made in installments and may be deferred until the date or dates when such Performance Share Award would have settled. Such payment may be subject to the Participant’s continuing Service and the achievement of performance criteria that are based on the performance criteria set forth in the Performance Share Award, with such changes that may necessary to give effect to the Corporate Transaction, provided that the performance period shall not be less favorable to the Participant than the performance period under such Performance Share Award (including any vesting acceleration provisions). For purposes of this Subsection (vii), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

(d) Reservation of Rights. Except as provided in Section 12, a Participant shall have no rights by reason of the occurrence of (or relating to) any Corporate Transaction, any transaction described in Section 12(a), or any transaction that results in an increase or decrease in the number of shares of stock of any class of the Corporation. Any issue by the Corporation of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, Awards. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Corporation to effect any Corporate Transaction, any transaction described in Section 12(a), any dissolution or liquidation of the Corporation or any transaction that results in an increase or decrease in the number of shares of stock of any class of the Corporation.

SECTION 13. DEFERRAL OF AWARDS.

(a) Committee Powers. The Committee in its sole discretion may permit or require a Participant to:

(i) Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Restricted Stock Units or Performance Shares credited to a deferred compensation account established for such Participant by the Committee as an entry on the Corporation’s books;

(ii) Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Restricted Stock Units; or

(iii) Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Restricted Stock Units or

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Performance Shares converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Corporation’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

(b) General Rules. A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Corporation. Such an account shall represent an unfunded and unsecured obligation of the Corporation and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Corporation. If the deferral or conversion of Awards is permitted or required, the Committee in its sole discretion may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 13.

SECTION 14. AWARDS UNDER OTHER PLANS.

The Corporation may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Restricted Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

SECTION 15. LEGAL AND REGULATORY REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Corporation’s securities may then be listed, and the Corporation has obtained the approval or favorable ruling from any governmental agency which the Corporation determines is necessary or advisable. The Corporation shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Corporation has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Corporation’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

SECTION 16. WITHHOLDING TAXES.

(a) General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Corporation for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Corporation shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

(b) Share Withholding. The Corporation may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Corporation withhold all

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or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the legally required minimum tax withholding.

SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS.

(a) Transferability. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported sale, assignment, conveyance, gift, pledge, hypothecation or transfer in violation of this Section 17(a) shall be void and unenforceable against the Corporation.

(b) Qualifying Performance Criteria. The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals for a specified period of time relating to one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Corporation as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ or quarter’s results or to a designated comparison group or index, in each case as specified by the Committee in the Award: (a) cash flow (including operating cash flow), (b) earnings per share, (c) (i) earnings before interest, (ii) earnings before interest and taxes, (iii) earnings before interest, taxes and depreciation, (iv) earnings before interest, taxes, depreciation and amortization, or (iv) earnings before any combination of such expenses or deductions, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin (including as a percentage of revenue), (n) return on operating revenue, (o) return on invested capital, (p) market segment shares or (q) economic profit (“Qualifying Performance Criteria”). The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occur during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary, nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and analysis of financial condition and results of operations appearing in the Corporation’s annual report to stockholders for the applicable year. If applicable, the Committee shall determine the Qualifying Performance Criteria not later than the 90^th day of the performance period, and shall determine and certify, for each Participant (or for all Participants), the extent to which the Qualifying Performance Criteria have been met. The Committee may not in any event

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increase the amount of compensation payable under the Plan upon the attainment of a Qualifying Performance Criteria to a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code.

(c) Clawback. Notwithstanding anything in this Plan to the contrary, the Corporation reserves the right to cancel or adjust the amount of any Award if the financial statements of the Corporation on which the calculation or determination of the Award was based are subsequently restated due to error or misconduct and, in the judgment of the Committee, the financial statements as so restated would have resulted in a smaller or no Award if such information had been known at the time the Award had originally been calculated or determined. In addition, in the event of such a restatement, the Corporation reserves the right to require a Participant to repay to the Corporation the amount by which the Award as originally calculated or determined exceeds the Award as adjusted pursuant to the preceding sentence.

SECTION 18. NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Corporation and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

SECTION 19. APPLICABLE LAW.

The Plan shall be construed and enforced in accordance with the law of the State of Delaware, without reference to its principles of conflicts of law.

SECTION 20. DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan, as set forth herein, shall terminate automatically on December 1, 2018 and may be terminated on any earlier date pursuant to Subsection (b) below.

(b) Right to Amend or Terminate the Plan. The Board of Directors may amend or terminate the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Corporation’s stockholders only to the extent required by applicable laws, regulations or rules.

(c) Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

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SECTION 21. EXECUTION.

To record the adoption of the Plan by the Board of Directors, the Corporation has caused its authorized officer to execute the same.

CLEARWATER PAPER CORPORATION
By	/s/ Thomas H. Carter
Name	Thomas H. Carter
Title	Vice President, Human Resources

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EX-10.2

Exhibit 10.2

CLEARWATER PAPER CORPORATION

PERFORMANCE SHARE AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS PERFORMANCE SHARE AGREEMENT (this “Agreement”) is made and entered into on the Grant Date specified in the attached Addendum to this Agreement by and between CLEARWATER PAPER CORPORATION, a Delaware corporation (the “Corporation”), and the Employee named in the Addendum (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Corporation maintains the Clearwater Paper Corporation 2008 Stock Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and the Employee has been selected to receive a contingent grant of Performance Shares under Section 11 of the Plan;

NOW, THEREFORE, for valuable consideration, the parties agree as follows:

1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall have the meanings set forth in this Section 1. Capitalized terms not defined in this Agreement shall have the same definitions as in the Plan.

(a) “Addendum” means the attached Addendum.

(b) “Disability” means the condition of the Employee who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months.

(c) “Grant Date” means the effective date of the Award of the Performance Shares to the Employee, as specified in the Addendum.

(d) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

2. Award. Subject to the terms of this Agreement and the Addendum, the Employee is hereby awarded a target contingent grant of Performance Shares in the number set forth in the attached Addendum (the “Award”). The number of Shares actually payable to the Employee is contingent on the performance achieved as specified in the Addendum. This Award has been granted pursuant to the Plan and is subject to all the terms and provisions thereof, a copy of which is attached and the terms and conditions of which are incorporated by reference into this Agreement.

3. Performance Measure. The Performance Measure is a comparison of the percentile ranking of the Corporation’s total stockholder return (stock price appreciation plus dividends as calculated pursuant to Section 5 below) as compared to the total stockholder return performance of a selected peer group of companies as specified in the Performance Schedule contained in the Addendum.

4. Performance Period. The Performance Period is the period specified in the Addendum and represents the period during which the total stockholder return for the Corporation and the selected peer group of companies is measured.

5. Calculation of Total Stockholder Return. Total stockholder return for a Share and for the stock of a member of the peer group shall be expressed as a percentage and calculated by:

(i) subtracting (a) the beginning average stock price for one share of stock (determined by calculating the average closing stock price during the two calendar months preceding the beginning of the Performance Period) from (b) the ending average stock price for such share of stock (determined by calculating the average closing stock price during the final two calendar months of the Performance Period, after taking into account the effect of any of the events described in Section 12 of the Plan occurring with respect to the Corporation or any member of the peer group); and

(ii) adding to the difference determined under subparagraph (i) above all cash dividends actually paid on such share of stock during the Performance Period; and

(iii) dividing the sum determined by subparagraphs (i) and (ii) above by the beginning average stock price determined pursuant to clause (a) of subparagraph (i) above.

6. Dividend Equivalents. During the Performance Period, dividend equivalents shall be converted into additional Performance Shares based on the closing price of the Corporation’s Common Stock on the New York Stock Exchange on the dividend payment date. Such additional Performance Shares shall vest or be forfeited in the same manner as the underlying Performance Shares to which they relate.

7. Settlement of Awards. Pursuant to Section 5 above, the Corporation shall deliver to the Employee one Share for each earned Performance Share (and, as applicable, for the accrued dividend equivalents) as determined in accordance with the provisions set forth in the Addendum. Any earned Performance Shares payable to the Employee (including Shares payable pursuant to Section 6 above) shall be paid solely in Shares. Any fractional Share will be rounded to the closest whole Share.

8. Time of Payment. Except as otherwise provided in this Agreement, the Shares issuable for the earned Performance Shares (and any accrued dividend equivalents) shall be delivered to the Employee (or, in the case of the Employee’s death before delivery, to the Employee’s beneficiary or representative) as soon as practicable after the end of the Performance Period as set forth in the Addendum, but in no event later than 60 days following the end of the Performance Period.

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9. Committee Discretion to Reduce Award. Notwithstanding any provision in this Agreement to the contrary, the Committee retains the right, at its sole and absolute discretion, to reduce or eliminate any Award that may become payable hereunder if the Committee determines that any one or more of the following conditions have occurred:

(a) The stockholder return to the Corporation’s stockholders has been insufficient;

(b) The stockholder return to the Corporation’s stockholders has been negative;

(c) The financial performance of the Corporation has been inadequate; or

(d) The operational performance of the Corporation has been inadequate.

In addition, the Committee may reduce or eliminate the Award granted hereby based on the Employee’s individual performance.

10. Retirement, Disability, or Death During the Performance Period. If the Employee’s Service terminates during the Performance Period because of the Employee’s retirement under the Retirement Plan, or his or her Disability or death, the Employee (or, in the case of the Employee’s death, the Employee’s beneficiary or representative) shall be entitled to a prorated number of the Performance Shares granted. The prorated number of Performance Shares earned is determined at the end of the Performance Period based on the ratio of the number of completed calendar months the Employee is employed during the Performance Period to the total number of months in the Performance Period.

11. Termination of Service During the Performance Period. If the Employee’s Service terminates during the Performance Period for any reason other than as described in Section 10, the entire Award granted under this Agreement shall be automatically terminated as of the date of such termination of Service.

12. Change of Control. Upon a Change of Control, the target award will be deemed payable and dividend equivalents will be calculated on the target award. The number of Shares payable will be determined by multiplying the target award plus dividend equivalents by a fraction, the numerator of which is the number of complete months that have elapsed during the Performance Period to the date of the Change of Control, and the denominator of which is the number of whole months in the entire Performance Period.

13. Available Shares. The Corporation agrees that it will at all times during the term of this Agreement reserve and keep available sufficient authorized but unissued or reacquired Shares to satisfy the requirements of this Agreement.

14. Applicable Taxes. In the event the Corporation determines that it is required to withhold state or federal income tax as a result of the payment of the Shares, the Employee will make arrangements satisfactory to the Corporation to enable it to satisfy such withholding requirements.

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15. Relationship to Other Benefits. Performance Shares shall not be taken into account in determining any benefits under any pension, savings, disability, severance, group insurance or any other pay-related plan of the Corporation or its Subsidiaries or Affiliates.

16. Required Deferral. In the event the Award would cause the Employee to qualify as a “covered employee” pursuant to Section 162(m) of the Code, that portion of the Award that would exceed the amount deductible by the Corporation under Section 162(m) of the Code shall be automatically deferred until the Employee’s compensation is no longer subject to Section 162(m) of the Code. Any portion of the Award so deferred shall be converted to Restricted Stock Units and dividend equivalents shall accrue on the Restricted Stock Units and be paid out as additional shares after the Employee’s compensation is no longer subject to Section 162(m) of the Code. Any deferral of the Award is intended to comply with Section 409A of the Code.

17. Stockholder Rights. Neither the Employee nor the Employee’s beneficiary or representative shall have any rights as a stockholder with respect to any Shares subject to this Agreement until such Shares shall have been issued to the Employee or the Employee’s beneficiary or representative.

18. Transfers, Assignments, Pledges. Except as otherwise provided in this Agreement, the rights and privileges conferred by this Agreement shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Award, or of any right or privilege conferred by this Agreement, contrary to the provisions of this Section 18, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred by this Agreement, the Award and the rights and privileges conferred by this Agreement shall immediately become null and void. However, this Section 18 shall not preclude: (i) an Employee from designating a beneficiary to succeed, after the Employee’s death, to any rights of the Employee or benefits distributable to the Employee under this Agreement not distributed at the time of the Employee’s death; or (ii) a transfer of any Award hereunder by will or the laws of descent or distribution. In that regard, any such rights shall be exercisable by the Employee’s beneficiary, and such benefits shall be distributed to the beneficiary, in accordance with the provisions of this Agreement and the Plan. The beneficiary shall be the named beneficiary or beneficiaries designated by the Employee in writing filed with the Corporation in such form and at such time as the Corporation shall require. If a deceased Employee has not designated a beneficiary, or if the designated beneficiary does not survive the Employee, any benefits distributable to the Employee shall be distributed to the legal representative of the estate of the Employee. If a deceased Employee has designated a beneficiary and the designated beneficiary survives the Employee but dies before the complete distribution of benefits to the designated beneficiary under this Agreement, then any benefits distributable to the designated beneficiary shall be distributed to the legal representative of the estate of the designated beneficiary.

19. No Employment Rights. Nothing in this Agreement shall be construed as giving the Employee the right to be retained as an employee or as impairing the rights of the Corporation or a Subsidiary or an Affiliate to terminate his or her employment at any time, with or without cause.

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20. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding.

21. Interpretation/Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall control.

22. Term of the Agreement. The term of this Agreement shall end upon the earlier of (i) the delivery of all of the Shares or other consideration to be issued in exchange for Performance Shares (and accrued dividend equivalents) or (ii) upon the termination of the Employee’s Service for any reason other than retirement under the Retirement Plan, or the Employee’s Disability or death.

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IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.

CORPORATION:

Clearwater Paper Corporation,

a Delaware corporation

By:

Name:

Title:

Date:

EMPLOYEE:

[Name of Employee]

Date:

6

EX-10.3

Exhibit 10.3

CLEARWATER PAPER CORPORATION

RESTRICTED STOCK UNIT AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made and entered into on the Grant Date specified in the attached Addendum to this Agreement, by and between Clearwater Paper Corporation, a Delaware corporation (the “Corporation”), and the Employee named in the attached Addendum (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Corporation maintains the Clearwater Paper Corporation 2008 Stock Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and the Employee has been selected to receive a grant of Restricted Stock Units under Section 10 of the Plan;

NOW, THEREFORE, for valuable consideration, the parties agree as follows:

1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall have the meanings set forth in this Section 1. Capitalized terms not defined in this Agreement shall have the same definitions as in the Plan.

(a) “Addendum” means the attached Addendum.

(b) “Cause” means the occurrence of any one or more of the following: (i) the Employee’s conviction of any felony or any crime involving fraud, dishonesty or moral turpitude; (ii) the Employee’s participation in a fraud or act of dishonesty against the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that results in material harm to the business of the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation; (iii) the Employee’s intentional, material violation of any contract between the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation and the Employee, or any statutory duty the Employee owes the Corporation, its Affiliates or any successor to the Corporation, in either case that the Employee does not correct within 30 days after written notice thereof has been provided to the Employee, (iv) the commission of an act by the Employee that could (either alone or with other acts) be considered harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or (v) the commission by the Employee of an alcohol or drug offense in violation of the Corporation’s, or a Subsidiary’s or an Affiliate’s Substance Abuse Policy for salaried employees.

(c) “Disability” means the condition of the Employee who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months.

(d) “Good Reason” means that one or more of the following are undertaken by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation without the

Employee’s written consent: (i) the assignment to the Employee of any duties or responsibilities that results in a material diminution in the Employee’s position or function as in effect immediately prior to the effective date of a Change of Control; provided, however, that a change in the Employee’s title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a reduction, without the Employee’s written consent, by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation in the Employee’s annual base salary, as in effect on the effective date of the Change of Control or as increased thereafter; (iii) any failure by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation to continue in effect (or substantially replace in the aggregate) any material benefit plan or program in which the Employee was participating immediately prior to the effective date of the Change of Control (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that would adversely affect the Employee’s participation in or reduce the Employee’s benefits under the Benefit Plan; provided, however, that no voluntary termination of Service with Good Reason shall be deemed to have occurred if the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation provide for the Employee’s participation in benefit plans and programs that, taken as a whole, are comparable to the Benefit Plans; (iv) a relocation of the Employee’s business office to a location more than 50 miles from the location at which the Employee performs duties as of the effective date of the Change of Control, except for required travel by the Employee on the Corporation’s, its Subsidiaries’ or Affiliates’ or any successor to the Corporation’s business to an extent substantially consistent with the Employee’s business travel obligations prior to the effective date of the Change of Control; or (v) a material breach by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation concerning the terms and conditions of the Employee’s employment.

(e) “Grant Date” means the effective date of the Award of the Restricted Stock Units to the Employee, as specified in the Addendum.

(f) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

(g) “Vesting Period” means that period or periods set forth in the Addendum.

2. Award. Subject to the terms of this Agreement and the Addendum, the Employee is hereby awarded a grant of Restricted Stock Units in the number set forth in the attached Addendum (the “Award”). Except as otherwise set forth herein, the number of Shares actually payable to the Employee is contingent on the Employee’s continuous Service for the duration of the Vesting Period. This Award has been granted pursuant to the Plan and is subject to all the terms and provisions thereof, a copy of which is attached and the terms and conditions of which are incorporated by reference into this Agreement.

3. Dividend Equivalents. During the Performance Period, dividend equivalents shall be converted into additional Restricted Stock Units based on the closing price of the Stock on the New York Stock Exchange on the dividend payment date. Such additional Restricted Stock Units shall vest or be forfeited in the same manner as the underlying Restricted Stock Units to which they relate.

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4. Settlement of Awards. Pursuant to Section 5 of this Agreement, the Corporation shall deliver to the Employee one Share for each vested Restricted Stock Unit included in the Award and, as applicable, one share for each vested Restricted Stock Unit that corresponds to an accrued dividend equivalent. Any vested Restricted Stock Units payable to the Employee (including Shares payable pursuant to Section 3 above) shall be paid solely in Shares. Any fractional Share will be rounded to the closest whole Share.

5. Time of Payment. Except as otherwise provided in this Agreement, the Shares issuable for the vested Restricted Stock Units shall be delivered to the Employee (or, in the case of the Employee’s death before delivery, to the Employee’s beneficiary or representative) as soon as practicable after (but no later than 60 days after) the earlier of the end of the Vesting Period or the date of the Employee’s termination of Service.

6. Retirement, Disability, or Death During the Vesting Period. If the Employee’s employment with the Corporation or a Subsidiary or an Affiliate terminates during the Vesting Period because of the Employee’s retirement under the Retirement Plan, or due to his or her Disability or death, and the Award provides for vesting in its entirety as of a single date, the Employee (or, in the case of the Employee’s death, the Employee’s beneficiary or representative) will be entitled to a prorated number of the Restricted Stock Units based on the number of months completed in the Vesting Period as of the date of termination divided by the total number of months in the Vesting Period. If the Award vests ratably during the term of the Vesting Period, the Employee will receive the next tranche of Restricted Stock Units scheduled to vest.

7. Termination of Employment During the Vesting Period. If the Employee’s Service terminates during the Performance Period for any reason other than as described in Section 10, the portion of unvested Restricted Stock Units granted under this Agreement shall be terminated automatically as of the date of such termination of Service.

8. Change of Control. In the event that the Employee’s Service with the Corporation or a Subsidiary or an Affiliate is involuntarily terminated without Cause or voluntarily terminated for Good Reason within one month prior to or 24 months following the effective date of a Change of Control that is at least six months following the Grant Date, the Restricted Stock Units shall become immediately vested in full and immediately payable in accordance with Section 4 above.

9. Available Shares. The Corporation agrees that it will at all times during the term of this Agreement reserve and keep available sufficient authorized but unissued or reacquired Shares to satisfy the requirements of this Agreement.

10. Applicable Taxes. In the event the Corporation determines that it is required to withhold state or federal income tax as a result of the payment of the Shares, the Employee will make arrangements satisfactory to the Corporation to enable it to satisfy such withholding requirements.

11. Relationship to Other Benefits. Restricted Stock Units shall not be taken into account in determining any benefits under any pension, savings, disability, severance, group insurance or any other pay-related plan of the Corporation or its Subsidiaries or Affiliates.

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12. Required Deferral. In the event the Award would cause the Employee to qualify as a “covered employee” pursuant to Section 162(m) of the Code, that portion of the Award that would exceed the amount deductible by the Corporation under Section 162(m) of the Code shall be automatically deferred until the Employee’s compensation is no longer subject to Section 162(m) of the Code. Any portion of the Award so deferred shall be credited with dividend equivalents and shall be paid out as additional Shares in the calendar year in which the Employee’s compensation is no longer subject to Section 162(m) of the Code. Any deferral of the Award is intended to comply with Section 409A of the Code.

13. Stockholder Rights. Neither the Employee nor the Employee’s beneficiary or representative shall have any rights as a stockholder with respect to any Shares subject to this Agreement until such Shares shall have been issued to the Employee or the Employee’s beneficiary or representative.

14. Transfers, Assignments, Pledges. Except as otherwise provided in this Agreement, the rights and privileges conferred by this Agreement shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Award, or of any right or privilege conferred by this Agreement, contrary to the provisions of this Section 14, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred by this Agreement, the Award and the rights and privileges conferred by this Agreement shall immediately become null and void. However, this Section 14 shall not preclude: (i) an Employee from designating a beneficiary to succeed, after the Employee’s death, to any rights of the Employee or benefits distributable to the Employee under this Agreement not distributed at the time of the Employee’s death; or (ii) a transfer of any Award hereunder by will or the laws of descent or distribution. In that regard, any such rights shall be exercisable by the Employee’s beneficiary, and such benefits shall be distributed to the beneficiary, in accordance with the provisions of this Agreement and the Plan. The beneficiary shall be the named beneficiary or beneficiaries designated by the Employee in writing filed with the Corporation in such form and at such time as the Corporation shall require. If a deceased Employee has not designated a beneficiary, or if the designated beneficiary does not survive the Employee, any benefits distributable to the Employee shall be distributed to the legal representative of the estate of the Employee. If a deceased Employee has designated a beneficiary and the designated beneficiary survives the Employee but dies before the complete distribution of benefits to the designated beneficiary under this Agreement, then any benefits distributable to the designated beneficiary shall be distributed to the legal representative of the estate of the designated beneficiary.

15. No Employment Rights. Nothing in this Agreement shall be construed as giving the Employee the right to be retained as an employee or as impairing the rights of the Corporation or a Subsidiary or an Affiliate to terminate his or her employment at any time, with or without cause.

16. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding.

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17. Interpretation/Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall control.

18. Term of the Agreement. The term of this Agreement shall end upon the earlier of (i) the delivery of all of the Shares or other consideration to be issued in exchange for the Restricted Stock Units (and accrued dividend equivalents) subject to the Award granted to the Employee or (ii) upon the termination of the Employee’s Service for any reason other than retirement under the Retirement Plan, or the Employee’s Disability or death.

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IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.

CORPORATION:

Clearwater Paper Corporation,

a Delaware corporation

By:

Name:

Title:

Date:

EMPLOYEE:

[Name of Employee]

Date:

6

EX-10.4

Exhibit 10.4

CLEARWATER PAPER CORPORATION

STOCK OPTION AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS STOCK OPTION AGREEMENT is made and entered into the day specified in the attached Addendum by and between Clearwater Paper Corporation, a Delaware corporation (the “Corporation”), and the Employee named in the attached Addendum (the “Employee”).

W I T N E S S E T H:

That to encourage stock ownership by employees of the Corporation and for other valuable consideration, the parties agree as follows:

1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall have the meanings set forth in this Section 1. Capitalized terms not defined in this Agreement shall have the same definitions as in the Plan.

(a) “Addendum” means the attached Addendum.

(b) “Date of Grant” means the date on which the Committee determined to grant this Option, as specified in the Addendum.

(c) “Disability” means the Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months.

(d) “Exercise Price” means the price per Share designated in the Addendum at which this Option may be exercised.

(e) “Misconduct” means that the Committee (or its delegate) has determined in its sole discretion that the Employee has:

(i) engaged in competition with the Corporation or a Subsidiary or an Affiliate, including, but not limited to, the rendering of services for any organization or engaging directly or indirectly in any business that is or may be (in the reasonable discretion of the Committee) directly or indirectly competitive with the Corporation or a Subsidiary or an Affiliate;

(ii) induced any customer of the Corporation or a Subsidiary or an Affiliate to breach any contract with the Corporation or a Subsidiary or an Affiliate, or induced any employee of the Corporation or a Subsidiary or an Affiliate to be employed or perform services elsewhere;

(iii) made any unauthorized disclosure of any of the secrets or confidential information of the Corporation or a Subsidiary or an Affiliate;

(iv) committed an act of embezzlement, fraud or theft with respect to the property of the Corporation or a Subsidiary or an Affiliate;

(v) engaged in conduct which is not in good faith and which directly results in material loss, damage or injury to the business, reputation or employees of the Corporation or a Subsidiary or an Affiliate;

(vi) committed an act that could (either alone or with other acts) be considered harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or

(vii) committed an alcohol or drug offense in violation of the Corporation’s or a Subsidiary’s or an Affiliate’s Substance Abuse Policy for salaried employees.

(f) “Option Period” means the term of this Option as provided in Section 4 of this Agreement.

(g) “Purchase Price” means the Exercise Price times the number of whole shares with respect to which this Option is exercised.

(h) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

2. Grant of Option. The Corporation grants to Employee the option to purchase that number of shares of Stock specified in the Addendum for the Exercise Price specified in the Addendum, on the terms and conditions stated in this Agreement. This Option has been granted pursuant to the Plan, a copy of the text of which Employee may obtain upon request to the Corporation.

3. Vesting. Subject to the conditions stated in this Agreement, unless a different period is specified in the Addendum, the period during which the option may be exercised (the “Vesting Schedule”) shall be as follows:

Number of Shares	Vesting Schedule*
50% of the number of shares specified in the Addendum	From one year from the Date of Grant to end of term for Option
50% of the number of shares specified in the Addendum	From two years from the Date of Grant to end of term for Option

Notwithstanding the foregoing, Employee shall have the right to exercise the Option for 100% of the Shares covered by the Option, or any portion thereof, upon a Change of Control that occurs after the date that is six months after the Date of Grant.

4. Option Term; Exercise After Termination of Service. The term of this Option shall end and this Option shall not be exercisable after seven years from the Date of Grant if this

^* See Paragraph 5 for further explanation of end of term for Option.

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Option is designated as an Incentive Stock Option in the Addendum or 10 years from the Date of Grant if this Option is designated as a Nonstatutory Stock Option in the Addendum or, if earlier, upon the termination of Employee’s Service, subject to the following provisions:

(a) If the termination of employment is caused by the Employee’s death, this Option, to the extent that it was exercisable under Section 3 of this Agreement at the date of death and had not previously been exercised, may be exercised at any time before the end of the Option Period as specified in the Option Agreement by Employee’s executors or administrators or by any person or persons who shall have acquired this Option directly from Employee by bequest or inheritance.

(b) If the termination of employment is caused by Disability or retirement under the Retirement Plan, this Option, to the extent it was exercisable under Section 3 of this Agreement at the end of such termination and had not previously been exercised, may be exercised at any time before the end of the Option Period as specified in the Option Agreement.

(c) If the termination of Service is for any reason other than death, Disability or retirement under the Retirement Plan, this Option, to the extent that it was exercisable under Section 3 of this Agreement at the date of such termination and had not previously been exercised, may be exercised within 90 days after the date of such termination. Notwithstanding the foregoing, if the termination of employment is by reason of Employee’s Misconduct, this Option shall cease to be exercisable at the time of such termination.

5. Share Reserve. The Corporation agrees that it will at all times during the Option Period reserve and keep available sufficient authorized but unissued or reacquired Common Stock to satisfy the requirements of this Agreement.

6. Manner of Exercise. Employee, or Employee’s representative, may exercise 20% or more of the portion of this Option that has become vested under Section 3 of this Agreement by giving written notice to the Corporation at Spokane, Washington, attention of the Human Resources Department, or by giving electronic notice in a manner approved by the Committee, specifying the election to exercise the Option, the number of Shares for which it is being exercised and the method of payment for the amount of the Purchase Price of the Shares for which this Option is exercised. Such payment shall be made:

(a) In United States dollars delivered at the time of exercise;

(b) Subject to the conditions stated in rules and regulations adopted by the Committee, by the surrender of Shares in good form for transfer, owned by the person exercising this Option and having an aggregate Fair Market Value on the date of exercise equal to the Purchase Price;

(c) In any combination of subsections (a) and (b) above, if the total of the cash paid and the Fair Market Value of the Shares surrendered equals the Purchase Price of the Shares for which this Option is being exercised; or

(d) If the Committee has established a broker-assisted cashless exercise program, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Corporation in payment of the Purchase Price.

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The notice shall be signed by the person or persons exercising this Option, and in the event this Option is being exercised by the representative of Employee, shall be accompanied by proof satisfactory to the Corporation of the right of the representative to exercise the Option. No Share shall be issued until full payment has been made. After receipt of full payment, the Corporation shall cause to be issued a certificate or certificates for the Shares for which this Option has been exercised, registered in the name of the person or persons exercising the Option (or in the name of such person or persons and another person as community property or as joint tenants), and cause such certificate or certificates to be delivered to or upon the order of such person or persons.

7. Withholding Taxes. In the event the Corporation determines that it is required to withhold state or federal income tax as a result of the exercise of this Option, as a condition to the exercise of the Option, Employee will make arrangements satisfactory to the Corporation to enable it to satisfy such withholding requirements.

8. Stockholder Rights. Neither Employee nor Employee’s representative shall have any rights as a stockholder with respect to any Share subject to this Option until such Shares shall have been issued to Employee or Employee’s representative.

9. Legal Restrictions. Unless at the time Employee gives notice of the exercise of this Option, the Shares to be issued are registered under the Securities Act, the notice shall include a statement to the effect that all Shares for which this Option is being exercised are being purchased for investment, and without present intention of resale, and will not be sold without registration under the Securities Act or exemption from registration, and such other representations as the Committee may require. The Corporation may permit the sale or other disposition of any Shares acquired pursuant to any such representation if it is satisfied that such sale or other disposition would not contravene applicable state or federal securities laws. Unless the Corporation shall determine that, in compliance with the Securities Act or other applicable statute or regulation, it is necessary to register any of the Shares for which this Option has been exercised, and unless such registration, if required has been completed, transaction advices to be provided upon the exercise of this Option shall contain the following legend on the face thereof:

“The Shares represented by this transaction advice have not been registered under the Securities Act of 1933 and may be offered, sold or transferred only if registered pursuant to the provisions of that Act or if an exemption from registration is available.”

10. No Employment Rights. Nothing in this Agreement shall be construed as giving Employee the right to be retained as an employee or as impairing the rights of the Corporation to terminate his or her employment at any time, with or without cause.

11. Interpretation; Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall control.

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5

IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.

CORPORATION:

Clearwater Paper Corporation,

a Delaware corporation

By:

Name:

Title:

Date:

EMPLOYEE:

[Name of Employee]

Date:

6

ADDENDUM TO STOCK OPTION AGREEMENT

CLEARWATER PAPER CORPORATION 2008 STOCK INCENTIVE PLAN

Name of Employee: [—]

1. Date of Grant: [—]

2. Exercise Price: $[—] per share, which is agreed to be one hundred percent (100%) of the Fair Market Value of the common stock subject to the Option on the Date of Grant.

3. The number of Shares subject to this Stock Option Agreement is [—], subject to adjustment as provided in Section 11 of the Plan and Section 6 of this Stock Option Agreement.

4. This Option is: [ISO] [NSO].

5. The Vesting Schedule for this Option is: The schedule specified in Paragraph 3 of the Stock Option Agreement, except that no exercise will be permitted for a fractional Share.

The document entitled Stock Option Agreement – Clearwater Paper Corporation 2008 Stock Incentive Plan is incorporated by this reference into this Addendum.

IN WITNESS WHEREOF, the Corporation has caused this addendum to the Stock Option Agreement to be executed on its behalf by its duly authorized representative, and the Employee has executed the same on the date indicated below.

IN WITNESS WHEREOF, each party has or has caused this Addendum to be executed as of the respective date set forth below.

CORPORATION:

Clearwater Paper Corporation,

a Delaware corporation

By:

Name:

Title:

Date:

EMPLOYEE:

[Name of Employee]

Date:

7

EX-10.5

Exhibit 10.5

CLEARWATER PAPER CORPORATION

ANNUAL INCENTIVE PLAN

Effective January 1, 2009

CLEARWATER PAPER CORPORATION

ANNUAL INCENTIVE PLAN

Effective January 1, 2009

1. ESTABLISHMENT AND PURPOSE

(a) The Clearwater Paper Corporation Annual Incentive Plan (the “Plan”) was adopted by the Board of Directors of Clearwater Paper Corporation and approved by its sole stockholder on December 1, 2008, to become effective January 1, 2009, to provide rewards to those employees of Clearwater Paper Corporation and its subsidiaries who are in a position to contribute to the achievement by Clearwater Paper Corporation and its subsidiaries of certain business performance objectives.

(b) Pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation (the “EMA”), the liability for paying 2008 annual bonuses to “Clearwater Employees” (as defined in the EMA) under the Potlatch Corporation Management Performance Award Plan II (the “MPAP II”) shall be transferred to this Plan if the “Distribution” (as defined in the EMA) occurs prior to the date for payment of such bonuses under the MPAP II. If such transfer occurs, the amounts and recipients of such bonuses shall be determined in accordance with the terms of the MPAP II, but the payment of such bonuses shall be made in accordance with the terms and conditions of this Plan.

(c) The Plan is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, and, in the case of covered employees, the exception for “qualified performance-based compensation” under Section 162(m) of the Code.

2. DEFINITIONS

(a) “Award” means an award under the Plan.

(b) “Award Year” means a Year with respect to which Awards are made.

(c) “Board of Directors” means the Board of Directors of Clearwater Paper Corporation.

(d) “CEO” means the Chief Executive Officer of Clearwater Paper Corporation.

(e) “Change of Control” means the effective date of any one of the following events:

(i) Upon consummation of a merger or consolidation involving Clearwater Paper (a “Business Combination”), in each case, unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of Clearwater

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Paper (the “Outstanding Common Stock”) and the then outstanding voting securities of Clearwater Paper entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns Clearwater Paper either directly or through one or more subsidiaries),

(B) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by Clearwater Paper or any of its Subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board of Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

(ii) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board of Directors on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by Clearwater Paper’s stockholders, was approved by a vote of at least a majority of the members of the Board of Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board of Directors occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board of Directors, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

(iii) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of either

(A) the then Outstanding Common Stock, or

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(B) the combined voting power of the Outstanding Voting Securities;

provided, however, that the following acquisitions shall not be deemed to be covered by this paragraph (iii):

(I) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation,

(II) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or

(III) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2(e)(i); or

(iv) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of Clearwater Paper; or

(v) Upon the approval by the stockholders of Clearwater Paper of a complete liquidation or dissolution of Clearwater Paper.

(f) “Clearwater Paper” means Clearwater Paper Corporation, a Delaware corporation.

(g) “Code” means the Internal Revenue Code of 1986, as amended.

(h) “Committee” means the committee which shall administer the Plan in accordance with Section 3.

(i) “Corporation” means Clearwater Paper Corporation and its Subsidiaries.

(j) “Covered Employee” means a “covered employee” within the meaning of Section 162(m) of the Code and the regulations thereunder.

(k) “Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of Clearwater Paper then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and Clearwater Paper.

(l) “Employee” means a full-time salaried employee (including any Officer) of the Corporation.

(m) “Guidelines” means the Clearwater Paper Corporation Stock Ownership Guidelines.

(n) “Management Deferred Compensation Plan” means the Clearwater Paper Corporation Management Deferred Compensation Plan, and any successor plan.

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(o) “Officer” means any Employee who is a Board of Directors elected officer of the Corporation and who is the chief manager of an Organization Unit.

(p) “Organization Unit” means a major organizational component or profit center of the Corporation as determined in accordance with rules and regulations adopted by the Committee, the Employees of which are eligible to participate in the Plan.

(q) “Participant” means any Officer and any Employee actively employed by the Corporation during an Award Year in an Organization Unit in a position designated as a participating position in accordance with rules and regulations adopted by the Committee.

(r) “Plan” means the Clearwater Paper Corporation Annual Incentive Plan, adopted effective January 1, 2009.

(s) “Separation from Service” means termination of a Participant’s service as an employee consistent with Section 409A of the Code and the regulations promulgated thereunder. For purposes of the Plan, “Separation from Service” generally means termination of a Participant’s employment as a common-law employee of Clearwater Paper and each Affiliate (as defined herein) of Clearwater Paper. A Separation from Service will not be deemed to have occurred if a Participant continues to provide services to Clearwater Paper or an Affiliate in a capacity other than as an employee and if the former employee is providing a level of bona fide services that is fifty percent (50%) or more of the average level of services rendered, during the immediately preceding thirty-six (36) months of employment with Clearwater Paper or an Affiliate; provided, however, that a Separation from Service will be deemed to have occurred if it is reasonably anticipated that a Participant’s service with Clearwater Paper and its Affiliates will terminate after a certain date or the level of bona fide services that the Participant will perform after such date (whether as an employee or another capacity) will permanently reduce to a rate that is less than twenty percent (20%) of the bona fide level of services rendered, on average, during the immediately preceding thirty-six (36) months (or if employed by Clearwater Paper and its Affiliates less than thirty-six (36) months, such lesser period). However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual’s right to reemployment with the service recipient is provided either by statute or by contract. If the period of leave exceeds six months and the individual’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. For purposes of determining when a Separation from Service occurs “Affiliate” means any other entity which would be treated as a single employer with Clearwater Paper under Section 414(b) or (c) of the Code, provided that in applying such Sections and in accordance with the rules of Treasury Regulations Section 1.409A-1(h)(3), the language “at least 50 percent” shall be used instead of “at least 80 percent.”

(t) “Subsidiary” means any corporation fifty percent (50%) or more of the voting stock of which is owned by Clearwater Paper or by one or more of such corporations.

(u) “Year” means the calendar year.

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3. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Compensation Committee of the Board of Directors, or such other committee as may be designated and appointed by the Board of Directors, which shall consist of at least three (3) members of the Board of Directors. Notwithstanding the foregoing, with respect to Participants who are Covered Employees, except in the case of a Change of Control as explained below, the Committee shall consist solely of “outside directors” within the meaning of Section 162(m). No member of the Committee shall be eligible to participate and receive Awards under the Plan while serving as a member of the Committee.

In addition to the powers and duties otherwise set forth in the Plan, the Committee shall have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan, to adopt and periodically review such rules and regulations consistent with the terms of the Plan as the Committee deems necessary or advisable in order to properly carry out the provisions of the Plan, to receive and review an annual report to be submitted by the CEO which shall describe and evaluate the operation of the Plan, and to take any and all necessary action in connection therewith. The Committee’s interpretation and construction of the Plan and its determination of the amount of any Award thereunder shall be conclusive and binding on all persons. In making such determinations, the Committee shall be entitled to rely on information and reports provided by the CEO.

Within thirty (30) days after a Change of Control, the Committee shall appoint an independent committee consisting of at least three (3) current (as of the effective date of the Change of Control) or former Corporation officers and directors, which shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan.

4. ELIGIBILITY AND PARTICIPATION

In accordance with rules and regulations adopted by the Committee, the CEO (the Committee in the case of Covered Employees) shall designate the Organization Units and the individuals who will participate in the Plan for an Award Year.

5. AWARDS

Awards shall be determined in accordance with Sections 6, 7 and 8 following the close of the Award Year and, unless deferred in accordance with the Management Deferred Compensation Plan, shall be paid no later than March 15 following the close of the Award Year.

6. DETERMINING THE ACTUAL FUNDED BONUS POOL

The total amount of Awards made to all Participants with respect to any Award Year shall be determined pursuant to this Section 6. For each Award Year, the Committee shall determine the Target Bonuses, Target Bonus Pool and the available range of Corporate Performance Modifiers in accordance with this Section 6 prior to or during the first 90 days of such Award Year.

(a) Target Bonus Pool. The Target Bonus Pool for an Award Year shall be determined first. The Target Bonus Pool for an Award Year shall be the sum of the Target

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Bonuses for all Participants for the Award Year. A Participant’s Target Bonus shall be an amount equal to a percentage of the Participant’s base salary, based on the position to which the Participant is assigned, as determined in accordance with rules and regulations adopted by the Committee. If a Participant does not qualify as a Participant for the entire period of the applicable Award Year, the Target Bonus will be prorated to reflect the number of half calendar months that the Employee was a Participant.

(b) Actual Funded Bonus Pool. The Actual Funded Bonus Pool for an Award Year shall be determined next. The Actual Funded Bonus Pool for each Award Year shall be determined in accordance with rules and regulations adopted by the Committee. The Actual Funded Bonus Pool shall be represented by a bookkeeping entry only and no Employee of the Corporation shall have any vested right therein. The Actual Funded Bonus Pool for an Award Year shall be equal to the Target Bonus Pool for the Award Year adjusted by one or more “Corporate Performance Modifiers”. A Corporate Performance Modifier shall be a percentage determined in accordance with rules and regulations adopted by the Committee. A Corporate Performance Modifier may range from a minimum of zero to a maximum of two hundred percent (200%).

(c) Qualifying Performance Criteria. In its rules and regulations concerning the determination of the Corporate Performance Modifiers, the Committee may take into consideration one or more of the following performance criteria, either individually, alternatively or in any combination, applied either to the Corporation as a whole or to Clearwater Paper, an Organization Unit or Subsidiary, either individually, alternatively or in any combination, and measured on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee: (i) cash flow (including operating cash flow), (ii) earnings per share, (iii) (A) earnings before interest, (B) earnings before interest and taxes, (C) earnings before interest, taxes and depreciation, (D) earnings before interest, taxes, depreciation and amortization, or (E) earnings before any combination of such expenses or deductions, (iv) return on equity, (v) total stockholder return, (vi) share price performance, (vii) return on capital, (viii) return on assets or net assets, (ix) revenue, (x) income or net income, (xi) operating income or net operating income, (xii) operating profit or net operating profit, (xiii) operating margin or profit margin (including as a percentage of revenue), (xiv) return on operating revenue, (xv) return on invested capital, (xvi) market segment shares or (xvii) economic profit (“Qualifying Performance Criteria”). After the end of the Award Year the Committee shall determine and certify the extent to which the Qualifying Performance Criteria have been met. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occur during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary, nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and analysis of financial condition and results of operations appearing in the Corporation’s annual report to stockholders for the applicable year.

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7. ALLOCATING THE ACTUAL FUNDED BONUS POOL AMONG ORGANIZATION UNITS

The Actual Funded Bonus Pool for each Award Year shall be allocated among the Organization Units in accordance with rules and regulations adopted by the Committee. The allocation methodology to be used for a particular Award Year shall be determined by the Committee prior to or during the first 90 days of the Award Year. The resulting allocations of the Actual Funded Bonus Pool for the Award Year may be adjusted up or down at the discretion of the CEO, except that they may not be adjusted up in the case of a Covered Employee.

8. DETERMINING INDIVIDUAL AWARDS

Each Officer shall determine the amount of the Award to each Participant who is assigned to such Officer’s Organization Unit in accordance with rules and regulations adopted by the Committee, by allocating such Organization Unit’s portion of the Actual Funded Bonus Pool among the Participants employed in such Organization Unit in proportion to the product of the Participant’s Target Bonus and the Participant’s individual performance modifier. Each Participant’s Award shall be subject to review by and approval of the CEO. Notwithstanding the foregoing, in the case of an Award to an Officer, the CEO, any Covered Employee, or any individual who is subject to Section 16 of the Exchange Act, this determination shall be made solely by the Committee.

The Committee shall determine the Covered Employee’s, Officer’s or other Section 16 individual’s available range of individual performance modifiers at the same time as it determines his or her Target Bonus at the beginning of the Award Year. The Committee may decrease, but not increase, the individual performance modifier when it determines the Covered Employee’s actual Award after the end of the Award Year. Such Covered Employee’s Award also may not be increased based on his or her individual performance (other than increases resulting from application of the pre-determined individual performance modifiers) or based on the Committee’s (or the CEO’s or another Officer’s) exercise of discretion to reduce the bonuses payable to other Participants.

In no event may the Award granted to the CEO exceed $2.5 million, or the Award granted to any other individual Covered Employee exceed $1.5 million.

9. FORM AND TIME OF PAYMENT OF AWARDS

(a) All non-deferred Awards under the Plan shall be paid in cash to all Participants other than those subject to the Guidelines. For a Participant subject to the Guidelines, the Award shall be paid in a combination of fifty percent (50%) cash and fifty percent (50%) common stock of Clearwater Paper if the Participant has not incrementally reached the required ownership level at the end of each of his or her first five (5) years under the Guidelines or has not maintained one hundred percent (100%) of the applicable guideline amount in subsequent years. The number of shares of common stock shall be determined by dividing the dollar value of the portion of the Award allocated as stock by the closing price of Clearwater Paper’s common stock on the date of the Committee meeting at which the Award payments are approved. Award amounts shall be prorated for the portion of the Award Year the Employee was an eligible Participant in accordance with rules and regulations adopted by the Committee. A Participant whose employment is terminated before the payment of an Award for any reason other than death, disability (within the meaning of Section 409A(a)(2)(C) of the Code) or early, normal or

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deferred retirement under the Clearwater Paper Salaried Retirement Plan shall not be entitled to receive an Award. Notwithstanding any other provision of this Plan, in no event may the achievement of performance goals for any Participant who is a Covered Employee be waived except in the event of such Participant’s death or disability (within the meaning of Section 409A(a)(2)(C) of the Code) or pursuant to Section 15 below.

(b) Notwithstanding the foregoing, a Participant may be permitted to elect to defer receipt of payment of all or a portion of an Award (other than an Award from the Special Awards Fund described in Section 10) subject to, and in accordance with, the terms of the Management Deferred Compensation Plan.

(c) Notwithstanding any other provision of the Plan, the Board of Directors or the Committee may, in its sole discretion, determine limits on the amount and alter the time and form of payment of Awards with respect to an Award Year if any of the following conditions occurs: (i) Clearwater Paper does not declare cash dividend with respect to its common stock during such Award Year, or (ii) the Actual Funded Bonus Pool determined pursuant to Section 6(b) for such Award Year exceeds six percent (6%) of Clearwater Paper’s consolidated net earnings, before taxes, for such Award Year.

10. SPECIAL AWARDS FUND

(a) Creation of the Fund. A Special Awards Fund shall be established with respect to each Award Year in an amount determined by the Committee but not to exceed ten percent (10%) of the Target Bonus Pool for such Award Year. The Special Awards Fund shall be represented by a bookkeeping entry only and no Employee of the Corporation shall have any vested right therein. The Special Awards Fund shall be in addition to the Bonus Pool created under Sections 5-9 above.

(b) Eligibility. Awards may be made in a total amount equal to the Special Awards Fund to those Employees of the Corporation who are not Participants with respect to such Award Year, but who in the judgment of an Officer have made outstanding contributions to the success of the Corporation.

(c) Selection. After the close of the Award Year, recipients of Awards under the Special Awards Fund shall be selected by the CEO upon the recommendation of an Officer. The amount of each individual’s Award under the Special Awards Fund shall be determined by the CEO upon the recommendation of an Officer and shall fall within a range set forth in rules and regulations adopted by the Committee, expressed as minimum and maximum percentages of annualized salary at the end of the year. Awards under the Special Awards Fund shall be announced by March 1 following the close of the Award Year.

(d) Payment. Awards under the Special Awards Fund shall be paid in full in cash no later than March 15 following the close of the Award Year.

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11. NO ASSIGNMENT OF INTEREST

The interest of any person in the Plan or in payments to be received pursuant to it shall not be subject to option or assignable either by voluntary or involuntary assignment or by operation of law, and any act in violation of this section shall be void.

12. EMPLOYMENT RIGHTS

The selection of an Employee as a Participant shall not confer any right on such Employee to receive an Award under the Plan or to continue in the employ of the Corporation or limit in any way the right of the Corporation to terminate such Participant’s employment at any time.

13. AMENDMENT OR TERMINATION OF THE PLAN

The Board of Directors or the Committee may amend, suspend or terminate the Plan at any time; provided, however, that any amendment adopted or effective on or after July 1 in any Award Year which would adversely affect the calculation of a Participant’s Award or the Participant’s eligibility for an Award for such Award Year shall be applied prospectively from the date the amendment was adopted or effective, whichever is later; provided, further that if the Plan is terminated effective on or after July 1 in any Award Year such termination shall not adversely affect any Participant’s eligibility for a pro rata share of an Award for the period of such Award Year before the date the termination was adopted or effective, whichever is later, subject to all other applicable terms and conditions of the Plan. The foregoing notwithstanding, no amendment adopted nor termination of the Plan following the occurrence of a Change of Control shall be effective if it (a) would reduce a Participant’s Target Bonus for the Award Year in which the Change of Control occurs, (b) would reduce an Award earned and payable to a Participant in respect of the Award Year that ended immediately before the Award Year in which the Change of Control occurs, or (c) modify the provisions of this sentence.

Notwithstanding the foregoing, the Vice President, Human Resources of Clearwater Paper shall have the power and authority to amend the Plan with respect to any amendment that (i) does not materially increase the cost of the Plan to the Corporation or (ii) is required to comply with new or changed legal requirements applicable to the Plan, including, but not limited to, Section 409A of the Code.

Without approval by vote of the shareholders, neither the Board of Directors, the Committee nor the Vice President, Human Resources of Clearwater Paper shall adopt any amendment that would modify the material terms of the Plan (within the meaning of Section 162(m) of the Code) as to Covered Employees.

14. SUCCESSORS AND ASSIGNS

The Plan shall be binding upon the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.

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15. CHANGE OF CONTROL

Notwithstanding any other provision of the Plan to the contrary, this Section 15 shall apply with respect to the determination of Awards and the payment of Awards following a Change of Control. In the event that the employment of a Participant terminates following a Change of Control, such Participant shall be guaranteed payment of a prorated Award for the Award Year in which the Change of Control occurs determined in accordance with Section 8 based on the Participant’s Target Bonus. A prorated Target Bonus shall be calculated by multiplying the Participant’s Target Bonus for the applicable Award Year by a fraction, the numerator of which is the number of full months in the Award Year completed at the effective time of the Change of Control, and the denominator of which is twelve (12). With respect to any Award earned but not yet paid in respect of the Award Year that ended immediately before the Award Year in which a Change of Control that also is a change in the ownership or effective control of Clearwater Paper or a change in the ownership of a substantial portion of the assets of Clearwater Paper as defined in the regulations promulgated under Section 409A of the Code (a “Code Section 409A Change of Control”) occurs, each Participant shall be guaranteed payment of his or her Award determined in accordance with Section 8 based on the performance results for the applicable Award Year. Awards paid pursuant to this Section 15 shall be paid in a lump sum in cash upon the earliest of (i) the time prescribed in Sections 5 and 9(a), or (ii) the date the Participant Separates from Service for any reason other than “misconduct,” as defined in Clearwater Paper’s Severance Program for Executive Employees or Salaried Severance Plan, whichever applies to the Participant, or any successor severance plan that applies to the Participant, following the Code Section 409A Change of Control.

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EX-10.6

Exhibit 10.6

CLEARWATER PAPER CORPORATION

MANAGEMENT DEFERRED COMPENSATION PLAN

Effective December 16, 2008

1. ESTABLISHMENT AND PURPOSE

(a) The Clearwater Paper Corporation Management Deferred Compensation Plan was adopted effective as of December 16, 2008, by the Board of Directors of Clearwater Paper Corporation to provide an opportunity for senior management of Clearwater Paper Corporation who have made the maximum elective contributions permitted under the 401(k) Plan to elect to defer additional compensation and to invest and accumulate such compensation on a tax-deferred basis.

(b) This Plan is also intended to provide the rules and regulations for deferral of awards under the Clearwater Paper Corporation Annual Incentive Plan (the “AIP”) beginning with the 2009 performance period.

(c) Pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation (the “EMA”), all deferred compensation liabilities under the Potlatch Corporation Management Performance Award Plan, the Potlatch Corporation Management Performance Award Plan II and the Potlatch Corporation Management Deferred Compensation Plan (collectively, the “Prior Plans”) with respect to “Clearwater Employees” (as defined in the EMA) have been transferred to and assumed by this Plan.

(d) Deferral and payment elections made by Clearwater Employees under the Potlatch Corporation Management Performance Award Plan II and the Potlatch Corporation Management Deferred Compensation Plan shall be given effect under this Plan. Certain provisions applicable to the payment of deferred compensation amounts transferred from the Potlatch Corporation Management Performance Award Plan, which are not subject to Section 409A of the Code, are set forth in Addendum A to this Plan.

(e) The provisions of this Plan for elections to defer base salary are effective for base salary earned on or after January 1, 2009.

(f) The Plan is intended to comply with the requirements of Section 409A of the Code. The Plan is intended to constitute an unfunded program for the benefit of a select group of management or highly compensated employees of ERISA, and, as such, to be exempt from all of the provisions of Parts 2, 3, and 4 of Title I of ERISA.

2. DEFINITIONS

(a) “Affiliate” means any other entity which would be treated as a single employer with the Corporation under Section 414(b) or (c) of the Code, provided that in applying such Sections and in accordance with the rules of Treasury Regulations Section 1.409A-1(h)(3), the language “at least 50 percent” shall be used instead of “at least 80 percent.”

(b) “AIP” means the Clearwater Paper Corporation Annual Incentive Plan and any successor plan thereto.

(c) “Beneficiary” means the person or persons designated by the Employee to receive payment of the Employee’s Deferred Compensation Account in the event of the death of the Employee.

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(d) “Board” and “Board of Directors” means the board of directors of the Corporation.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means the Compensation Committee of the Board.

(g) “Compensation” means the amount of compensation due by the Corporation to an Employee for his or her services as an Employee as either (i) annual base salary or (ii) an award under the AIP.

(h) “Corporation” means Clearwater Paper Corporation, a Delaware corporation.

(i) “Deferred Compensation Account” means the bookkeeping account established pursuant to Section 6 on behalf of each Employee who elects to participate in the Plan, including any account transferred to this Plan from a Prior Plan. Within an Employee’s Deferred Compensation Account, a Directed Investment Account, Stock Unit Account, Cash Account, and appropriate sub-accounts, shall be maintained as are necessary for the proper administration of a Participant’s Deferred Compensation Account. An Employee who has made a deferral under a Prior Plan shall be deemed to have elected to participate in this Plan. A separate Deferred Compensation Account shall be maintained on behalf of each Employee with respect to any deferred compensation amounts transferred to this Plan from the MPAP, as described in Addendum A.

(j) “Disabled” means an Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.

(k) “Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of Clearwater Paper Corporation then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and Clearwater Paper Corporation.

(l) “Dividend Equivalent” means an amount equal to the cash distribution paid on an outstanding share of the Corporation’s common stock. Dividend Equivalents shall be credited to Stock Units as if each Stock Unit were an outstanding share of the Corporation’s common stock, except that Dividend Equivalents shall also be credited to fractional Stock Units.

(m) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(n) “Employee” means a full-time salaried employee of the Corporation or any subsidiary thereof.

(o) “401(k) Plan” means the Clearwater Salaried 401(k) Plan, as amended.

(p) “MPAP” means the Potlatch Corporation Management Performance Award Plan.

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(q) “MPAP II” means the Potlatch Corporation Management Performance Award Plan II.

(r) “Performance-Based Compensation” means compensation the amount of which, or the entitlement to which, is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered preestablished if established in writing by not later than ninety (90) days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-Based Compensation does not include any amount or portion of any amount that will be paid either regardless of performance, or based upon a level of performance that is substantially certain to be met at the time the criteria is established. Compensation may be Performance-Based Compensation where the amount will be paid regardless of satisfaction of the performance criteria due to the Employee’s death, disability, or a Change in Control Event (as defined in Treasury Regulation Section l.409A-3(i)(5)), provided that a payment made under such circumstances without regard to the satisfaction of the performance criteria will not constitute performance-based compensation. For this purpose, a disability refers to any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months. Performance-Based Compensation may include payments based upon subjective performance criteria, provided that: (i) the subjective performance criteria are bona fide and relate to the performance of the Participant, a group of service providers that includes the Participant, or a business unit for which the Participant provides services (which may include the entire organization); and (ii) the determination that any subjective performance criteria have been met is not made by the Participant or a family member of the Participant (as defined in Section Code 267(c)(4) applied as if the family of an individual includes the spouse of any member of the family), or a person under the effective control of the Participant or such a family member, and no amount of the compensation of the person making such determination is effectively controlled in whole or in part by the Participant or such a family member.

(s) “Plan” means the Clearwater Paper Corporation Management Deferred Compensation Plan.

(t) “Plan Year” means the 12-month period beginning January 1 and ending December 31.

(u) “Prior Plan” means the Potlatch Corporation Management Performance Award Plan, the Potlatch Corporation Management Performance Award Plan II and the Potlatch Corporation Management Deferred Compensation Plan.

(v) “Separation from Service” means termination of an Employee’s service as an Employee consistent with Section 409A of the Code and the regulations promulgated thereunder. For purposes of the Plan, “Separation from Service” generally means termination of an Employee’s employment as a common-law employee of the Corporation and each Affiliate of the Corporation. A Separation from Service will not be deemed to have occurred if an Employee

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continues to provide services to the Corporation or an Affiliate in a capacity other than as an employee and if the former employee is providing a level of bona fide services that is fifty percent (50%) or more of the average level of services rendered, during the immediately preceding thirty-six (36) months of employment with the Corporation or Affiliate; provided, however, that a Separation from Service will be deemed to have occurred if it is reasonably anticipated that an Employee’s service with the Corporation and its Affiliates will terminate after a certain date or the level of bona fide services that the Employee will perform after such date (whether as an employee or another capacity) will permanently reduce to a rate that is less than twenty percent (20%) of the bona fide level of services rendered, on average, during the immediately preceding thirty-six (36) months (or if employed by the Corporation and its Affiliates less than thirty-six (36) months, such lesser period). However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual’s right to reemployment with the service recipient is provided either by statute or by contract. If the period of leave exceeds six months and the individual’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

(w) “Stock Units” means the deferred portion of Compensation, which is converted into a unit denominated in shares of the Corporation’s common stock.

(x) “Value” means the closing price of the Corporation’s common stock as reported in the New York Stock Exchange, Inc., composite transactions reports for the relevant date.

(y) “Variable Fractions Method” is a distribution method for amounts payable in installments. The amount of the first installment is determined by dividing the Participant’s account balance by the total number of installments due. Each subsequent annual installment is equal to the Participant’s account balance as adjusted for earnings or losses since the last distribution date divided by a denominator equal to the total number of installments due minus the number of installments previously paid.

(z) “Year” shall mean the calendar year.

3. ELIGIBILITY TO MAKE DEFERRALS

(a) Each Employee who is in a position that is eligible for Long-Term Incentive awards (an “Eligible Employee”) and has made the maximum elective deferrals under Section 402(g) of the Code or the maximum elective contributions permitted under the terms of the 401(k) Plan shall be eligible to elect to defer base salary under the Plan.

(b) Each Eligible Employee who is eligible to receive an award under the AIP shall be eligible to defer such award under the Plan; provided that, an Employee who is required to defer his or her award shall automatically become a participant in this Plan.

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4. PARTICIPATION

(a) Each Employee who is eligible to participate in the Plan pursuant to Section 3 above shall, prior to the beginning of each Year and in accordance with the applicable deadline established by the Committee, have the option to make an irrevocable election to defer a percentage of his or her Compensation earned during the following Year before the beginning of each such Year. Compensation paid after December 31 of a Plan Year for services performed by the Employee during the final payroll period of the calendar year and which payroll period includes the last day of such calendar year shall be treated as earned for services performed in the year paid.

(b) Notwithstanding the foregoing, an Employee may make an irrevocable election to participate during a Year with respect to Compensation earned during that Year and subsequent to the filing of such election, provided such election is made within thirty (30) days of the Employee’s initial eligibility to participate in this Plan and any other nonqualified deferred compensation plans treated as a single plan with this Plan under Section 409A of the Code. Any such initial election shall apply only to Compensation earned for services performed after the date of the election. If compensation is due for services performed over a period of time which includes the period both before and the period after the date of the election, the election will apply to an amount equal to the total amount of the compensation paid for such performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period.

(c) Notwithstanding the preceding rules, a deferral election for an award of Compensation under the AIP, which constitutes Performance-Based Compensation, may be made no later than six months before the end of such performance period. This special election rule is available only (i) if the Employee performs services for the Company or its Affiliate continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date an Election is made with respect to such payment, (ii) the Election is made before the amount of the Performance-Based Compensation to be received becomes reasonably ascertainable or, if the Performance-Based Compensation is a specified or calculable amount, when the amount is substantially certain to be paid, and (iii) the performance period is at least twelve (12) months in duration.

(d) The Committee may also adopt such additional or alternative election rules provided that such rules comply with the rules of Section 409A of the Code and applicable regulatory authority.

5. DEFERRAL ELECTIONS

(a) An Employee who elects to participate in the Plan with respect to annual base salary or an award under the AIP for a Year shall file a deferral election with respect to each type of Compensation on such form as the Committee shall prescribe, which shall indicate:

(i) The amount or percentage of each type of Compensation that such Employee elects to defer pursuant to the terms of the Plan. The percentage must be in increments of ten percent (10%) and may not exceed fifty percent (50%) in the case of annual base salary.

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An election to voluntarily defer an award under the AIP shall be for not less than fifty percent (50%) of such award. Notwithstanding the foregoing, an election to defer compensation may not reduce the Employee’s remaining compensation below the amount necessary to satisfy applicable employment tax withholding, income tax withholding, and benefit plan withholding. This election shall be irrevocable with respect to each type of Compensation for that Year to which it applies after the applicable deadline for making such election as provided in Section 4 for that Year.

(ii) The percentage of the Compensation deferred pursuant to the election that is to be converted into Stock Units or deemed invested in any other investment account available under Section 7.

(b) An Employee who elects to Participate in the Plan shall have only one form of payment election in effect for all amounts deferred under the Plan. Subject to Section 5(c), below, at the time of an Employee’s initial election to defer base salary or an award under the AIP, the Employee shall file an election and shall indicate:

(i) Whether the deferred Compensation shall be paid in a lump sum or paid in five (5), ten (10), or fifteen (15) annual installments. For purposes of the Plan, installment payments shall be treated as a single distribution for purposes of Section 409A of the Code. Deferred Compensation shall be paid in fifteen (15) annual installments unless the Employee elects otherwise.

(ii) Whether benefit payments shall commence immediately upon Separation from Service or attainment of a specified age, if later.

(c) A Participant’s election as to the time and form of payment of deferred Compensation shall be irrevocable and binding on all deferred Compensation under the Plan. For avoidance of doubt it is intended that a Participant shall have only one method of payment in effect. Notwithstanding any provision herein to the contrary, an Employee or former Employee may revoke a previous election and make a new election as to the time and form of distribution under the Plan. Such new election shall take effect twelve (12) months after it is filed with the Committee and shall apply only to that portion of the Employee’s or former Employee’s Deferred Compensation Account and/or Stock Units scheduled to be paid more than twelve (12) months after the date the election is filed with the Committee; provided, however, that the newly scheduled distribution date must be at least five years later than the originally scheduled distribution date.

(d) For purposes of determining the payment election in effect for a participant with existing deferrals under the MPAP II or the Potlatch Corporation Management Deferred Compensation Plan as of the date this Plan is effective, such existing payment election shall remain in effect for all existing and future deferrals under the Plan unless the Employee elects and becomes subject to a new payment election in accordance with the rules of this paragraph. Notwithstanding the limitations on changes in the time or form of payment under this Section, a Participant may, not later than the date permitted by the Committee, which shall in no event be later than December 31, 2008, change his or her election with respect to the time or form of payment for his or her Deferred Compensation Account, provided that such election shall not be

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effective if it would defer payment of an amount otherwise payable in the year the election to change payment is made or would accelerate any payment into the year the election to change the payment date is made.

6. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS

(a) For each Employee who has deferred compensation under the AIP or who has elected to defer base salary, the Corporation shall establish a Deferred Compensation Account to which shall be credited an amount equal to that portion of the Compensation which would have been payable currently to the Employee but for the terms of the deferral election.

(b) If the deferral election includes an election to convert a percentage of the Compensation deferred pursuant to the election into Stock Units, the number of full and fractional Stock Units shall be determined as follows:

(i) For an award under the AIP that is deferred under this Plan, the number of full and fractional Stock Units shall equal the number of shares of the Corporation’s common stock determined by dividing the dollar value of the portion of the award to be converted into Stock Units by the closing price of the Corporation’s common stock on the date of the Committee meeting at which the award payments are approved (or the most recent trading day if the Committee does not meet on a trading day).

(ii) Amounts of base salary which are deferred and with respect to which the Employee has elected to defer into Stock Units shall be accumulated in the Cash Account subject to Section 7 below and shall be converted into full and fractional Stock Units on a quarterly basis as of the first trading day of each calendar quarter by dividing the accumulated amount by the Value of the Corporation’s common stock on such crediting date.

(c) Deferred Compensation Accounts shall be established for any Employee for whom deferred compensation amounts have been transferred to this Plan from a Prior Plan. A separate Deferred Compensation Account shall be maintained on behalf of each Employee with respect to any deferred compensation amounts transferred to this Plan from the MPAP, as described in Addendum A.

(d) Amounts credited to an Employee’s Deferred Compensation Account shall be fully vested at all times.

7. TREATMENT OF DEFERRED COMPENSATION ACCOUNT AND STOCK UNITS DURING DEFERRAL PERIOD

(a) Directed Investment Account. The balance of each Employee’s Directed Investment Account shall be adjusted, for earnings and losses commencing with the date as of which any amount is credited to the Directed Investment Account. Such earnings or losses during the deferral period for amounts credited to a Participant’s Directed Investment Account shall be computed by reference to the rate of return on one or more of the investment alternatives that are available under the 401(k) Plan and which are designated by the Committee as available under this Plan. Each Employee may select (in ten percent (10%) increments) which investment alternative(s) will be used for this purpose with respect to his or her deferred Compensation, and

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the alternative(s) selected need not be the same as the Employee has selected under the 401(k) Plan, but any such selection will apply only prospectively. The Committee shall determine how frequently such selections may be changed.

(b) Stock Unit Account. On each dividend payment date, dividend equivalents shall be credited to each full and fractional Stock Unit to the extent such Stock Unit was in the Participant’s Stock Unit Account on the dividend record date immediately preceding the applicable dividend payment date. Such dividend equivalents shall be converted into Stock Units as of the dividend payment date by dividing the amount of the dividend equivalents by the Value of the Corporation’s common stock on the dividend payment date.

(c) Cash Account. Amounts credited to the Cash Account shall be credited with additional amounts on a quarterly basis. Credits shall be made at a rate equal to 120% of the long-term applicable federal rate, with quarterly compounding, as published under Section 1274(d) of the Code for the first month of each calendar quarter. For periods on and after January 1, 2009 (or such later date as the Committee shall determine), the Cash Account shall be available only for the temporary holding of amounts pending conversion into Stock Units in accordance with Section 6, and Participants shall not be permitted to select the Cash Account as a deemed investment for their deferrals.

(d) Effect of Certain Transactions. In the event that there occurs a dividend or other distribution of shares of the Corporation’s common stock (“Shares”), a dividend in the form of cash or other property that materially affects the fair market value of the Shares, a stock split, a reverse stock split, a split-up, a split-off, a spin-off, a combination or subdivision of Shares or other securities of the Corporation, an exchange of Shares for other securities of the Corporation, or a similar transaction or event that materially affects the fair market value of the Shares, the Committee, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall make appropriate adjustments in the number of each Participant’s Stock Units determined as of the date of such occurrence.

8. FORM AND TIME OF PAYMENT OF DEFERRED COMPENSATION ACCOUNT

Subject to Section 8(b), payment of a Employee’s Deferred Compensation Account shall commence on the April 15^th following the later of (i) the end of the quarter in which Separation from Service occurs, or (ii) the Participant’s attainment of the age elected by the Participant under Section 5(b) of the Plan. A Participant may request an earlier distribution of an amount credited to his or her Deferred Compensation Account upon the occurrence of an unforeseeable emergency within the meaning of Section 409A and the regulations thereunder as determined by the Committee, but only to the extent necessary to alleviate the emergency. Payment of a Employee’s Stock Units shall also be made at such time except that, within the six-month period beginning on the last date on which Compensation have been converted into Stock Units on behalf of the Employee, to the extent that Committee reasonably determines that earlier payment would result in a violation of Federal securities laws, payment of the Employee’s Stock Units shall be made on the last day of the month in which such six-month period expires. Notwithstanding the previous sentence, Stock Unit payments shall be made following the Employee’s death, Disability or the date of the Employee’s Separation from Service, without regard to whether such six-month period has expired. For the purpose of payment, Stock Units shall be converted to cash based on the Value of the Corporation’s common stock on the last trading day of the month preceding the month during which the distribution is due to be made.

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The amount of each payment due for a Deferred Compensation Account shall be determined by application of the Variable Fractions Method. Each annual installment for Years subsequent to the Year in which payment commences shall be made on April 15^th.

In the case of a Employee who has both Stock Units and other deemed investment accounts available under Section 7, if a partial distribution of a deferred portion of Compensation is to be made and if the Employee’s Stock Units are immediately payable in accordance with the first paragraph of this Section, payment shall be made partially from the Employee’s Stock Units and partially from such other deemed investment accounts, in proportion to the relative value of the Employee’s Stock Units and such other accounts. If the Employee’s Stock Units are not immediately payable in accordance with the previous paragraph, the partial payment shall be made entirely from such other deemed investment accounts, in proportion to the relative value of such accounts.

Notwithstanding any other provision of the Plan to the contrary:

(a) No distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in Section 409A(a)(3) of the Code and regulations promulgated thereunder; and

(b) A distribution made to an Employee who is identified as a Key Employee at the time of his or her Separation from Service will be delayed for a minimum of six (6) months if the Employee’s distribution is triggered by his or her Separation from Service. Any payment that otherwise would have been made except for the application of this subsection (b) during such six (6)-month period will be made in one (1) lump sum payment no later than the last day of the second month following the month that is six (6) months from the date of the Employee’s Separation from Service. The Employee’s Deferred Compensation Account shall continue to be adjusted for earnings and losses and Dividend Equivalents during the delay. The determination of which Employees are Key Employees will be made by the Corporation in its sole discretion in accordance with this subsection (b) and Sections 416(i) and 409A of the Code and the regulations promulgated thereunder.

(i) “Identification Date” means each December 31.

(ii) “Key Employee” means an Employee who, on an Identification Date, is:

(A) An officer of the Corporation having annual compensation greater than the compensation limit in Section 416(i)(1)(A) (i) of the Code, provided that no more than fifty (50) officers of the Corporation shall be determined to be Key Employees as of any Identification Date;

(B) A five percent (5%) owner of the Corporation; or

(C) A one percent (1%) owner of the Corporation having annual compensation from the Corporation of more than $150,000.

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If an Employee is identified as a Key Employee on an Identification Date, then such Employee shall be considered a Key Employee for purposes of the Plan during the period beginning on the first April 1 following the Identification Date and ending on the next March 31.

(c) Notwithstanding the foregoing, a lump sum distribution shall be made in the Committee’s discretion to clear out a small balance held for the benefit of the Participant (or his or her Beneficiary) provided that the Committee’s decision is evidenced in-writing prior to the date of the distribution, the distribution is not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code and the payment results in the termination of all benefits due under the plan and all other “account balance plans” treated as a single nonqualified deferred compensation plan with this Plan under Treasury Regulation Section 1.409A-1(c)(2).

(d) If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Committee may direct payment to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Administrator may require proof of incompetency, minority, incapability or guardianship as it may deem appropriate prior to distribution. Such distribution shall completely discharge the Committee, the trustees of any trusts, and the Corporation from all liability with respect to such benefit.

9. EFFECT OF DEATH OF PARTICIPANT

Upon the death of a participating Employee, all amounts, if any, remaining in his or her Deferred Compensation Account shall be distributed to the Beneficiary designated by the Employee. Such distribution shall be made at the time or times specified in the Employee’s deferral election. If the designated Beneficiary does not survive the Employee or dies before receiving payment in full of the Employee’s Deferred Compensation Account, payment shall be made to the estate of the last to die of the Employee or the designated Beneficiary.

10. CLAIMS AND REVIEW PROCEDURE

(a) Informal Resolution of Questions. Any participant who has questions or concerns about his or her deferred Compensation under the Plan is encouraged to communicate with the Vice President, Human Resources. If this discussion does not give the participant satisfactory results, a formal claim for benefits may be made within one (1) year of the event giving rise to the claim in accordance with the procedures of this Section 10.

(b) Formal Benefits Claim - Review by Appeals Committee. A participant may make a written request for review of any matter concerning his or her deferred Compensation under the Plan. The claim must be addressed to the Appeals Committee, Management Deferred Compensation Plan, Clearwater Paper Corporation, 601 W. Riverside Avenue, Suite 1100, Spokane, Washington 99201. The Corporation’s Appeals Committee shall decide the action to be taken with respect to any such request and may require additional information, if necessary, to process the request. The Appeals Committee shall review the request and shall issue its decision, in writing, no later than ninety (90) days after the date the request is received, unless the circumstances require an extension of time. If such an extension is required, written notice of the extension shall be furnished to the person making the request within the initial ninety (90)-day

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period, and the notice shall state the circumstances requiring the extension and the date by which the Appeals Committee expects to reach a decision on the request. In no event shall the extension exceed a period of ninety (90) days from the end of the initial period.

(c) Notice of Denied Request. If the Appeals Committee denies a request in whole or in part, it shall provide the person making the request with written notice of the denial within the period specified in Subsection (b) above. The notice shall set forth the specific reason for the denial, reference to the specific Plan provisions upon which the denial is based, a description of any additional material or information necessary to perfect the request, an explanation of why such information is required, and an explanation of the Plan’s appeal procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.

(d) Appeal to Appeals Committee.

(i) A person whose request has been denied in whole or in part (or such person’s authorized representative) may file an appeal of the decision in writing with the Appeals Committee within sixty (60) days of receipt of the notification of denial. The appeal must be addressed to: Appeals Committee, Management Deferred Compensation Plan, Clearwater Paper Corporation, 601 W. Riverside Avenue, Suite 1100, Spokane, Washington 99201. The Appeals Committee, for good cause shown, may extend the period during which the appeal may be filed for another sixty (60) days. The appellant and his or her authorized representative shall be permitted to submit written comments, documents, records and other information relating to the claim for benefits. Upon request and free of charge, the appellant should be provided reasonable access to and copies of, all documents, records or other information relevant to the appellant’s claim.

(ii) The Appeals Committee’s review shall take into account all comments, documents, records and other information submitted by the appellant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Appeals Committee’s review shall not be restricted to those provisions of the Plan cited in the original denial of the claim.

(iii) The Appeals Committee shall issue a written decision within a reasonable period of time but not later than sixty (60) days after receipt of the appeal, unless special circumstances require an extension of time for processing, in which case the written decision shall be issued as soon as possible, but not later than one-hundred twenty (120) days after receipt of an appeal. If such an extension is required, written notice shall be furnished to the appellant within the initial sixty (60)-day period. This notice shall state the circumstances requiring the extension and the date by which the Appeals Committee expects to reach a decision on the appeal.

(iv) If the decision on the appeal denies the claim in whole or in part written notice shall be furnished to the appellant. Such notice shall state the reason(s) for the denial, including references to specific Plan provisions upon which the denial was based. The notice shall state that the appellant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for

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benefits. The notice shall describe any voluntary appeal procedures offered by the Plan and the appellant’s right to obtain the information about such procedures. The notice shall also include a statement of the appellant’s right to bring an action under Section 502(a) of ERISA.

(v) The decision of the Appeals Committee on the appeal shall be final, conclusive and binding upon all persons and shall be given the maximum possible deference allowed by law.

(e) Exhaustion of Remedies. No legal or equitable action for benefits under the Plan shall be brought unless and until the claimant has submitted a written claim for benefits in accordance with Section 10(a) above, has been notified that the claim is denied in accordance with Section 10(c) above, has filed a written request for a review of the claim in accordance with Section 10(d) above, and has been notified in writing that the Appeals Committee has affirmed the denial of the claim in accordance with Section 10(d) above; provided, however, that an action for benefits may be brought after the Appeals Committee has failed to act on the claim within the time prescribed in Section 10(b) and Section 10(d), respectively.

11. PARTICIPANT’S RIGHTS UNSECURED

The interest under the Plan of any participating Employee and such Employee’s right to receive a distribution from the Plan shall be an unsecured claim against the general assets of the Corporation. The Deferred Compensation Account and all deemed investment accounts available under Section 7 shall be bookkeeping entries only and no Employee shall have an interest in or claim against any specific asset of the Corporation pursuant to the Plan. Notwithstanding the foregoing, the Corporation may, in its discretion, choose to contribute to the Clearwater Paper Corporation Benefits Protection Trust Agreement to assist with the payment of benefits under the Plan.

12. STATEMENT OF DEFERRED COMPENSATION ACCOUNT AND STOCK UNITS

The Committee shall provide an annual statement of each participating Employee’s Deferred Compensation Account as soon as practicable after the end of each calendar year.

13. NONASSIGNABILITY OF INTERESTS

The interest and property rights of any Employee under the Plan shall not be subject to option nor be assignable either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any act in violation of this Section 13 shall be void.

14. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Committee. In addition to the powers and duties otherwise set forth in the Plan, the Committee shall have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan and to take any and all necessary action in connection therewith, including retaining outside managers to assist with the administration of the Plan. The Committee’s interpretation and construction of the Plan shall be conclusive and binding on all persons. In its discretion, the Committee may delegate to the Vice President, Human Resources the authority for the effective administration of the Plan and for assigning responsibility to designated managers to carry out such duties.

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Within thirty (30) days after a Change of Control (as defined in Section 17), the Committee shall appoint an independent committee consisting of at least three (3) current (as of the effective date of the Change of Control) or former Corporation officers and directors, which shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan.

15. AMENDMENT OR TERMINATION OF THE PLAN

(a) The Board or the Committee may amend, suspend or terminate the Plan at any time. The foregoing notwithstanding, the Plan may not be amended (including any amendment to this Section 15) or terminated by the Board or the Committee if such amendment or termination would or adversely affect or impair the Employee’s right to receive amounts credited to his or her Deferred Compensation Account.

(b) Except as provided in Section 15(c) or as otherwise permitted under Section 409A of the Code, in the event of termination of the Plan, the Employees’ Deferred Compensation Accounts may, in the Board’s or the Committee’s discretion, be distributed within the period beginning twelve months after the date the Plan was terminated and ending twenty-four months after the date the Plan was terminated, or pursuant to Section 8, if earlier. If the Plan is terminated and Deferred Compensation Accounts are distributed, the Board or the Committee shall terminate all account balance non-qualified deferred compensation plans with respect to all Employees and shall not adopt a new account balance non-qualified deferred compensation plan for at least three (3) years after the date the Plan was terminated. A termination and liquidation of the Plan under this Section 15(b) shall be made only in compliance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(c).

(c) The Board or the Committee may terminate the Plan upon a corporate dissolution of the Corporation that is taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), provided that the Employees’ Deferred Compensation Accounts are distributed and included in the gross income of the Employees by the latest of (i) the Year in which the Plan terminates or (ii) the first Year in which payment of the Deferred Compensation Accounts is administratively practicable.

(d) Notwithstanding the foregoing, the Vice President, Human Resources of the Corporation shall have the power and authority to amend the Plan with respect to any amendment that (i) does not materially increase the cost of the Plan to the Corporation or (ii) is intended to comply with new or changed legal requirements applicable to the Plan, including, but not limited to, Section 409A of the Code.

16. SUCCESSORS AND ASSIGNS

The Plan shall be binding upon the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.

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17. CHANGE IN CONTROL

For purposes of the Plan, “Change of Control” shall mean

(a) Upon consummation of a merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such Business Combination,

(i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of the Corporation (the “Outstanding Common Stock”) and the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

(ii) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(iii) at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(b) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or

15

removal of a member or members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

(c) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either

(i) the then Outstanding Common Stock, or

(ii) the combined voting power of the Outstanding Voting Securities;

provided, however, that the following acquisitions shall not be deemed to be covered by this paragraph (c):

(A) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation,

(B) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or

(C) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of paragraph (a) of this Section; or

(d) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

(b) (e) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

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ADDENDUM A

SPECIAL PROVISIONS APPLICABLE TO BENEFITS TRANSFERRED FROM

THE POTLATCH CORPORATION MANAGEMENT PERFORMANCE AWARD PLAN

(THE “MPAP”)

The following provisions shall apply solely with respect to certain benefits transferred from the MPAP and assumed by this Plan pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation. This Addendum is intended to apply solely to compensation that was both deferred and vested prior to January 1, 2005, and earnings on such amounts, which compensation and earnings are “grandfathered” from the application of section 409A of the Code (collectively, the “Grandfathered Benefits”). Accordingly, this Addendum shall not apply to any compensation originally deferred under this Plan, or originally deferred under the MPAP II or Potlatch Corporation Management Deferred Compensation Plan and transferred to this Plan, or to any earnings on such amounts.

The Committee shall cause separate Deferred Compensation Accounts to be established under this Plan to account for such Grandfathered Benefits separately from other benefits accrued under this Plan. The following provisions, which are based on Section 9 of the MPAP, shall apply solely to such Grandfathered Benefits in lieu of the provisions of Sections 7 and 8 of this Plan (except as specifically provided below). Defined terms not otherwise defined in this Plan shall have the meaning given such terms under the MPAP.

DEFERRAL OF AWARDS; FORM AND TIME OF PAYMENT

(a) A participant may elect to defer receipt of payment of a single Award or all future Awards under the MPAP until after termination of employment pursuant to rules and regulations adopted by the Committee. In addition, in the absence of such an election, if the payment of an Award would cause the participant’s annual compensation to exceed the amount deductible under the Internal Revenue Code, the participant will be required to defer receipt of the portion of the Award that would be non-deductible in the Award Year until after termination of employment. Such rules and regulations shall establish procedures for the Committee, at its discretion, to accelerate the schedule of payments of deferred Awards.

(b) The Award, the payment of which is deferred under (a) above, shall be converted at the participant’s election into cash and/or full and fractional stock units equal to the number of shares the participant would have received if the Award had not been deferred.

On each dividend payment date, dividend equivalents shall be credited to each full and fractional stock unit to the extent such stock unit was in the participant’s deferred account on the dividend record date immediately preceding the applicable dividend payment date. Such dividend equivalents shall be converted into stock units as of the dividend payment date by dividing the amount of the dividend equivalents by the closing price of Potlatch Corporation’s common stock on the dividend payment date.

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Stock units shall be subject to adjustment as provided in Section 7(d) of the Plan.

(c) The cash portion of an Award, the payment of which was deferred under (a) above, shall be credited with earnings during the period of deferral through December 31 of the Plan Year preceding the Plan Year in which payment of the amounts deferred hereunder is made. The earnings credited shall be based on the following:

(i) For periods prior to January 1, 2009, earnings shall be calculated using an interest rate equal to 70% of the higher of the following averages, compounded annually: (i) the prime rate charged by the major commercial banks as of the first business day of each month (as reported in an official publication of the Federal Reserve System) or (ii) the average monthly long-term rate of A-rated corporate bonds (as published in Moody’s Bond Record).

(ii) For periods on and after January 1, 2009, earnings shall be calculated using an interest rate equal to 120% of the long-term applicable federal rate, with quarterly compounding, as published under Section 1274(d) of the Code for the first month of each calendar quarter.

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EX-10.7

Exhibit 10.7

CLEARWATER PAPER CORPORATION

SEVERANCE PROGRAM FOR EXECUTIVE EMPLOYEES

(Effective January 1, 2005

Amended and Restated as of December 16, 2008)

TABLE OF CONTENTS

		Page
SECTION 1.	ADOPTION AND PURPOSE OF PROGRAM	2
SECTION 2.	DEFINITIONS	2
SECTION 3.	ELIGIBILITY AND DETERMINATION OF VESTING SERVICE	7
SECTION 4.	SEVERANCE BENEFITS	7
SECTION 5.	CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS	11
SECTION 6.	TIME AND FORM OF BENEFIT	14
SECTION 7.	EFFECT OF DEATH OF EMPLOYEE	14
SECTION 8.	AMENDMENT AND TERMINATION	15
SECTION 9.	CLAIMS PROCEDURE	15
SECTION 10.	REVIEW PROCEDURE	16
SECTION 11.	RESOLUTION OF DISPUTES INVOLVING SECTION 5	17
SECTION 12.	BASIS OF PAYMENTS TO AND FROM PROGRAM	18
SECTION 13.	NO EMPLOYMENT RIGHTS	18
SECTION 14.	NON-ALIENATION OF BENEFITS	18
SECTION 15.	SUCCESSORS AND ASSIGNS	18
SECTION 16.	NOTICES	18

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CLEARWATER PAPER CORPORATION

SEVERANCE PROGRAM FOR EXECUTIVE EMPLOYEES

Effective January 1, 2005

Amended and Restated as of December 16, 2008

SECTION 1. ADOPTION AND PURPOSE OF PROGRAM

The Clearwater Paper Corporation Severance Program for Executive Employees, formerly known as the Potlatch Forest Products Corporation Severance Program for Executive Employees (the “Program”) was adopted effective January 1, 2005 and is hereby amended and restated as of December 16, 2008, by Clearwater Paper Corporation (the “Corporation”) to provide a program of severance payments to certain employees of the Corporation and its designated subsidiaries. The Program is an employee welfare benefit plan within the meaning of section 3(1) of ERISA and section 2510.3-1 of the regulations issued thereunder. The plan administrator of the Program for purposes of ERISA is the Corporation.

SECTION 2. DEFINITIONS

(a) “Affiliate” means any other entity which would be treated as a single employer with the Corporation under Section 414(b) or (c) of the Code, provided that in applying such Sections and in accordance with the rules of Treasury Regulations Section 1.409A-1(h)(3), the language “at least 50 percent” shall be used instead of “at least 80 percent.”

(b) “Appeals Committee” means the appeals committee described in Section 10.

(c) “Base Compensation” means an Eligible Employee’s base rate of pay as in effect at the time the Eligible Employee Separates from Service, or, if greater, the rate in effect at the time the material change described in Section 5(a)(iv) occurs or the time a Change of Control described in Section 5(b) occurs, if applicable. An Eligible Employee’s base rate of pay shall be determined without reduction for (i) any Deferred Contributions made by the Eligible Employee pursuant to the Salaried 401(k) Plan or (ii) any contributions made by the Eligible Employee pursuant to the Clearwater Paper Custom Benefits Plan.

(d) “Board” means the Board of Directors of Clearwater Paper Corporation.

(e) “Change of Control” means

(i) Upon consummation of a merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of the Corporation (the “Outstanding Common Stock”) and the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the

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combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

(B) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(ii) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

(iii) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either

(A) the then Outstanding Common Stock, or

(B) the combined voting power of the Outstanding Voting Securities;

provided, however, that the following acquisitions shall not be deemed to be covered by this paragraph (iii):

(I) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation,

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(II) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or

(III) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2(e)(i); or

(iv) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

(v) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

(f) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(g) “Code” means the Internal Revenue Code of 1986, as amended.

(h) “Committee” means the Compensation Committee of the Board of Directors of the Corporation.

(i) “Corporation” means Clearwater Paper Corporation.

(j) “Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of the Corporation then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and the Corporation.

(k) “Eligible Employee” means a Principal Officer of a Participating Company or other employee of a Participating Company who participates in the Program.

(l) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(m) “Identification Date” means each December 31.

(n) “Incentive Plan” means the Potlatch Corporation Management Performance Award Plan II, the Clearwater Paper Corporation Annual Incentive Plan or any successor plan.

(o) “Key Employee” means an Eligible Employee who, on an Identification Date, is:

(A) An officer of the Corporation or an Affiliate having annual compensation greater than the compensation limit in Section 416(i)(1)(A)(i) of the Code, provided that no more than fifty officers of the Corporation and its Affiliates shall be determined to be Key Employees as of any Identification Date;

(B) A five percent owner of the Corporation; or

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(C) A one percent owner of the Corporation having annual compensation from the Corporation and its Affiliates of more than $150,000.

If an Eligible Employee is identified as a Key Employee on an Identification Date, then such Eligible Employee shall be considered a Key Employee for purposes of the Plan during the period beginning on the first April 1 following the Identification Date and ending on the next March 31.

(p) “Misconduct” means that the Eligible Employee

(i) Has been convicted of any felony or crime involving fraud, dishonesty or moral turpitude;

(ii) Has engaged in unfair competition with a Participating Company or any successor to a Participating Company;

(iii) Has induced any customer of a Participating Company or any successor to a Participating Company to breach any contract with a Participating Company or any successor to a Participating Company;

(iv) Has made any unauthorized disclosure of any of the secrets or confidential information of a Participating Company or any successor to a Participating Company;

(v) Has committed an act of embezzlement, fraud or theft with respect to the property of a Participating Company or any successor to a Participating Company;

(vi) Has engaged in conduct, including any intentional, material violation of any contractual or statutory duty that is not corrected following thirty (30) days written notice, which is not in good faith and which directly results in material loss, damage or injury to the business, reputation or employees of a Participating Company or any successor to a Participating Company;

(vii) Has committed an act that could (either alone or with other acts) be considered harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or

(viii) Has committed an alcohol or drug offense in violation of a Participating Company’s substance abuse policy for salaried employees.

(q) “Normal Retirement Date” means “normal retirement date” as determined under the Retirement Plan.

(r) “Participating Company” means the Corporation and its subsidiaries designated by the Committee to participate in the Program.

(s) “Present Value” means the present value calculated using the assumed discount rate applied in projecting the Corporation’s pension benefit obligations for financial reporting purposes and the RP 2000 mortality table.

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(t) “Principal Officers” means the president and chief executive officer, chief financial officer, corporate secretary, treasurer and controller of the Corporation and any other Board-appointed officers of a Participating Company.

(u) “Program” means the Clearwater Paper Corporation Severance Program for Executive Employees.

(v) “Reduction in Authority or Responsibility” means

(i) The assignment to the Eligible Employee of any duties that are materially inconsistent in any respect with the Eligible Employee’s position (which may include status, offices, titles and reporting requirements), authority, duties, or responsibilities as in effect immediately prior to such assignment, or

(ii) Any other action by a Participating Company or any successor to a Participating Company which results in a material diminution in such position, authority, duties, or responsibilities, excluding for this purpose (i) an isolated, insubstantial, and inadvertent action taken in good faith and which is remedied by the Corporation promptly after receipt of notice thereof given by the Eligible Employee, or (ii) any temporary Reduction in Authority or Responsibility while the Eligible Employee is absent from active service on any approved disability, or other approved leave of absence.

By way of example, a reduction under this definition shall include, but not be limited to:

(A) The removal of any material division, business or operating unit, or other business organization from the direct managerial responsibilities of the Eligible Employee, or material reduction in the size or scope of responsibility or operating budget of any division, business, operating unit, or other business organization for which the Eligible Employee has direct managerial responsibility; or

(B) A reduction in the Eligible Employee’s authority to legally bind a Participating Company or any successor to a Participating Company without first obtaining any additional authority or approval.

(w) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan as in effect from time to time.

(x) “Salaried 401(k) Plan” means the Clearwater Paper Salaried 401(k) Plan as in effect from time to time.

(y) “Separation from Service” means termination of an Eligible Employee’s service as an Eligible Employee consistent with Section 409A of the Code and the regulations promulgated thereunder. For purposes of the Plan, “Separation from Service” generally means termination of an Eligible Employee’s employment as a common-law employee of the Corporation and each Affiliate of the Corporation. A Separation from Service will not be deemed to have occurred if an Eligible Employee continues to provide services to the Corporation or an Affiliate in a capacity other than as an employee and if the former employee is providing a level of bona fide services that is fifty percent (50%) or more of the average level of services rendered,

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during the immediately preceding thirty-six (36) months of employment with the Corporation or Affiliate; provided, however, that a Separation from Service will be deemed to have occurred if it is reasonably anticipated that an Eligible Employee’s service with the Corporation and its Affiliates will terminate after a certain date or the level of bona fide services that the Eligible Employee will perform after such date (whether as an employee or another capacity) will permanently reduce to a rate that is less than twenty percent (20%) of the bona fide level of services rendered, on average, during the immediately preceding thirty-six (36) months (or if employed by the Corporation and its Affiliates less than thirty-six (36) months, such lesser period). However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual’s right to reemployment with the service recipient is provided either by statute or by contract. If the period of leave exceeds six months and the individual’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

(z) “Supplemental Plan” means the Clearwater Paper Corporation Salaried Supplemental Benefit Plan II and any successor plan.

(aa) “Year of Vesting Service” means a year of vesting service as determined under the Retirement Plan.

SECTION 3. ELIGIBILITY AND DETERMINATION OF VESTING SERVICE.

All Principal Officers and such other employees of the Participating Companies who are designated by the Committee to participate in the Program shall be eligible to participate in the Program. As a condition to participation in the Program, each Eligible Employee shall agree in writing to become bound by its terms, including, without limitation, the provisions of Section 11.

SECTION 4. SEVERANCE BENEFITS.

(a) Basic Severance Benefits. Upon the occurrence of any of the events specified in Section 5(a), an Eligible Employee shall receive (in lieu of any other severance benefit payable under any other plan or program now or hereafter maintained by a Participating Company) Basic Severance Benefits under the Program as follows:

(i) A cash benefit equal to three (3) weeks of the Eligible Employee’s Base Compensation for each full Year of Vesting Service completed by such Eligible Employee;

(ii) The Eligible Employee’s unused and accrued vacation pay, if any, determined as of the date when the Eligible Employee Separates from Service under the terms of the Participating Company’s officer vacation policy as in effect when the applicable event specified in Section 5(a) occurs (which, in the case of Separation from Service pursuant to Section 5(a)(iv), shall be the date of the material change rather than the date the Eligible Employee Separates from Service);

(iii) Eligibility for an “Award” under the Incentive Plan for the “Award Year” in which he or she Separates from Service, determined under all the terms and conditions of the Incentive Plan other than any requirement that the Eligible Employee remain employed through the end of the Award Year, or later, in order to qualify for an Award; and

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(iv) Continued coverage as an employee during a period of weeks equal to three (3) times the number of full Years of Vesting Service completed by the Eligible Employee, under the following employee benefit plans of the Corporation:

(A) Medical coverage in the amount, if any, that the Eligible Employee had in effect on the day preceding the date of his or her Separation from Service;

(B) Dental coverage in the amount, if any, that the Eligible Employee had in effect on the day preceding the date of his or her Separation from Service; and

(C) Basic life insurance coverage in the amount, if any, that the Eligible Employee had in effect on the day preceding the date of his or her Separation from Service.

Notwithstanding any of the foregoing provisions of this Section 4(a)(iv):

(1) Any such continued coverage shall terminate when the Eligible Employee becomes eligible for coverage by the life insurance, medical or dental plan of another employer.

(2) In the event that after an Eligible Employee’s Separation from Service with a Participating Company he or she is otherwise entitled to continued coverage under the Corporation’s basic life insurance, medical and dental plans pursuant to any employee benefit plan or program of the Corporation (other than this Program), the total benefits paid for by the Participating Companies during the period described above shall not exceed the benefits to which the Eligible Employee is entitled under this Section 4(a)(iv).

(3) For purposes of this Section 4(a)(iv), the Corporation’s basic life insurance plan shall not include any other type of life insurance coverage provided through or by the Corporation to or on behalf of its employees.

(4) During the period of such continued coverage, the Eligible Employee shall not be eligible to participate in the Corporation’s disability income plan or as an employee in the Retirement Plan, the Salaried 401(k) Plan, any qualified or nonqualified stock incentive or phantom stock plan of the Corporation or any employee benefit plan or program now or hereafter maintained by any Participating Company other than those plans listed in Section 4(a)(iv)(A)-(C).

Notwithstanding the foregoing provisions of this subsection (a), the sum of the amounts payable under (i) above shall be not less than six (6) months of the Eligible Employee’s Base Compensation nor greater than one (1) year of the Eligible Employee’s Base Compensation and the period of continued coverage described in (iv) above shall be not less than six (6) months nor more than one (1) year from the Eligible Employee’s Separation from Service. The Committee may, in its discretion, increase the benefit payable to any Eligible Employee without regard to the foregoing limitation.

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(b) Change of Control Benefits. Upon the occurrence of any of the events specified in Section 5(b), an Eligible Employee shall receive (in lieu of any severance benefit payable under Section 4(a) or any other severance benefit payable under any other plan or program now or hereafter maintained by a Participating Company) Change of Control Benefits under the Program as follows:

(i) Within ten (10) business days following the effective date an Eligible Employee Separates from Service, a lump sum cash benefit equal to the Eligible Employees’ annual Base Compensation plus his or her annual Base Compensation multiplied by his or her standard bonus percentage (as determined pursuant to the Incentive Plan), determined as of the date of the Change of Control or the effective date the Eligible Employee Separates from Service, whichever produces the larger amount, multiplied by the appropriate factor from the following table:

Eligible Employee	Pay Multiple Factor
Chief Executive Officer	3.00
Other Eligible Employees	2.50

Notwithstanding the foregoing, if the Eligible Employee Separates from Service on or after the date thirty (30) months prior to the Eligible Employee’s Normal Retirement Date, the applicable factor shall be a fraction, the numerator of which is the number of full months between the date the Eligible Employee Separates from Service and such Normal Retirement Date and the denominator of which is twelve (12). An Eligible Employee described in the preceding sentence shall be entitled to an additional benefit equal to the difference between the benefit payable to the Eligible Employee, if any, under the Retirement Plan and the Retirement Plan Supplemental Benefit provisions of the Supplemental Plan, and such benefits that would have been payable, if any, under the Retirement Plan and Supplemental Plan if the Eligible Employee had remained an Eligible Employee and continued to earn his or her Base Compensation until his or her Normal Retirement Date; provided, however, that the Present Value of such additional benefit shall not exceed the difference between the lump sum benefit determined under the preceding sentence and the lump sum benefit determined using the otherwise applicable factor from the table above. Such additional benefit shall be paid at the same time and in the same form as any benefit payable to the Eligible Employee under the Supplemental Plan or, if no benefit is payable to the Eligible Employee under the such plan, the Present Value of such additional benefit shall be paid in a lump sum at the same time as the Eligible Employee’s Change of Control Benefits are paid;

(ii) A lump sum cash benefit equal to the Eligible Employee’s unused and accrued vacation pay, if any, under the terms of the Participating Company’s officer vacation policy. For this purpose, (A) an Eligible Employee’s Base Compensation and the terms of the officer vacation policy shall be determined as of the date when the Eligible Employee Separates from Service or as of the date of the Change of Control, whichever produces the larger amount and (B) accrued vacation pay shall be paid notwithstanding any minimum service requirement of the Participating Company’s officer vacation policy;

(iii) Eligibility for an “Award” for the “Award Year” in which he or she Separates from Service under the Incentive Plan, determined under all the terms and conditions

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of such plan (other than any requirement that the Eligible Employee remain employed through the end of the Award Year, or later, in order to qualify for an Award) but based on the Eligible Employee’s target or standard bonus determined pursuant to such plan; provided, however, that such benefit shall not be payable with respect to any Award Year for which the Eligible Employee receives a payment pursuant to any similar change of control provision in the Incentive Plan;

(iv) COBRA premium payments during the number of years equal to the applicable factor determined under (b)(i) above, subject to all of the conditions and limitations described in Section 4(a)(iv)(1) through (4) above (determined without regard to the last paragraph of Section 4(a)) under the following employee benefit plans of the Corporation;

(A) Provided that the Eligible Employee timely elects continued coverage under COBRA, medical coverage in the amount, if any, that the Eligible Employee had in effect on the day preceding the date of his or her Separation from Service;

(B) Provided that the Eligible Employee timely elects continued coverage under COBRA, dental coverage in the amount, if any, that the Eligible Employee had in effect on the day preceding the date of his or her Separation from Service; and

(C) Basic life insurance coverage in the amount, if any, that the Eligible Employee had in effect on the day preceding the date of his or her Separation from Service;

(v) In the case of an Eligible Employee who has less than two (2) Years of Vesting Service on the date he or she Separates from Service, a lump sum cash benefit equal to (A) the value of that portion of the Eligible Employee’s accounts in the Salaried 401(k) Plan attributable to “Company Contributions” under such plan made on the Eligible Employee’s behalf in a “Plan Year” which are unvested, plus (B) the unvested portion, if any, of the Eligible Employee’s “401(k) Plan Supplemental Benefit” account under the Supplemental Plan. The value of those portions of the Eligible Employee’s “Company Stock Account” and the “401(k) Plan Supplemental Benefit” accounts referred to in the preceding sentence shall be determined as of the date the Eligible Employee Separates from Service with the Participating Companies; and

(vi) A lump sum cash benefit equal to the Present Value of the Eligible Employee’s “Normal Retirement Benefit” and “Retirement Plan Supplemental Benefit” determined under the Retirement Plan and the Supplemental Plan, respectively, if the Eligible Employee was not entitled to a “Vested Benefit” under the Retirement Plan as of the date the Eligible Employee Separates from Service with the Participating Companies.

(c) Payment of Excise Taxes. If any payment or benefit to or for the benefit of the Eligible Employee in connection with a Change of Control is deemed an “excess parachute payment” as defined in Section 280G of the Code subject to the excise tax imposed by Section 4999 of the Code, then in the event it shall be determined that any payment or distribution by a Participating Company to or for the benefit of the Eligible Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Program or otherwise, but determined without regard to any additional payments required under this Section 4(c) (a “Payment”)) would

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be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incur^red by the Eligible Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Eligible Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Eligible Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Eligible Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 4(c), if it shall be determined that the Eligible Employee is entitled to a Gross-Up Payment, but that the Payments would not exceed the safe harbor amount of 2.99 times the Eligible Employee’s “base amount,” as defined in Code section 280G(b)(3), by $100,000 or more for the Chief Executive Officer and by $50,000 for other Eligible Employees, then no Gross-Up Payment shall be made to the Eligible Employee and the Payments, in the aggregate, shall be reduced to an amount such that the receipt of Payments would not give rise to any Excise Tax. In that event, the reduced amount payable (the “Reduced Amount”) shall be determined by reducing or modifying payments in a manner and order of priority that provides the Eligible Employee with the largest net after-tax value; provided that payments of equal after-tax present value shall be reduced or modified in the reverse order of payment. For purposes of this Section 4(c), the Eligible Employee shall be deemed to pay federal, state and local taxes at the highest marginal rate of taxation for the applicable calendar year. The amount of the payment to the Eligible Employee shall be estimated by a third-party service provider selected by the Corporation as of the date of the event specified in Section 5(a) or, if earlier, as of the date of the Change of Control as determined pursuant to Section 5(b). Within thirty (30) business days following the effective date of an Eligible Employee’s Separation from Service, the estimated amount due the Eligible Employee pursuant to this Section 4(c) shall he paid to the Eligible Employee. In the event that the amount of the estimated payment is less than the amount actually due to the Eligible Employee under this Section 4(c), the amount of any such shortfall shall be paid to the Eligible Employee within ten (10) business days after the existence of the shortfall is discovered.

(d) No Duty to Mitigate; Offset. The Eligible Employee shall not be required to mitigate the amount of any payments provided under Section 4(b) and 4(c), nor shall any payment or benefit provided for in Section 4(b) and 4(c) be offset by any compensation earned by the Eligible Employee as the result of employment by another employer or by retirement benefits. Notwithstanding the foregoing, the Committee in its discretion may reduce any payments provided under Section 4(a), 4(b) and 4(c) (to an amount not less than zero) by any payment(s) that an Eligible Employee has or will receive pursuant to an arrangement or agreement with a Participating Company that provides for severance payment(s), including related tax payment(s), to which such Eligible Employee may be entitled in the event of termination of employment.

SECTION 5. CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS.

(a) Payment Of Basic Severance Benefits. Subject to the provisions of Section 5(c), an Eligible Employee will be eligible for the benefits specified in Section 4(a) upon the occurrence of any of the following events (except that an Eligible Employee who has satisfied the conditions of Section 5(b) will be eligible for the benefits specified in Section 4(b) rather than the benefits specified in Section 4(a)):

(i) The Eligible Employee’s involuntary termination of employment that constitutes a Separation from Service by a Participating Company or by the Eligible Employee’s Separation from Service at the request of the Company for any reason other than Misconduct, subject to the limitations of Section 5(c)(ii); provided, however, that if the Separation from Service is due to death or because the Eligible Employee is disabled (as defined in section 409A(a)(2)(C) of the Code), the Eligible Employee shall not be eligible for any severance benefits under the Program; or

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(ii) Termination of the Eligible Employee’s employer’s status as a Participating Company due to the sale to a third party or a spin-off of a designated subsidiary, subject to the limitations of Section 5(c)(ii) and provided that such transaction is a change in the ownership or effective control of the Corporation or a change in the ownership of a substantial portion of the assets of the Corporation as defined in the regulations promulgated under Section 409A of the Code; or

(iii) The Participating Company requires the Eligible Employee to relocate his or her principal place of work and the new principal place of work is fifty (50) or more miles further from the Eligible Employee’s primary residence than was his or her former principal place of work, and the Eligible Employee elects to Separate from Service rather than to relocate; or

(iv) The Eligible Employee Separates from Service with a Participating Company within twenty-four (24) months following:

(A) A material Reduction in Authority or Responsibility of the Eligible Employee. Whether a Reduction in Authority or Responsibility of the Eligible Employee is material shall be determined in accordance with the criteria set forth in Section 2(v) in the definition of Reduction in Authority or Responsibility; provided, however, that (I) a change in the Eligible Employee’s reporting relationship to another executive who is within the same reporting level, (II) a reduction in the Eligible Employee’s business unit budget or a reduction in the Eligible Employee’s business unit headcount or number of direct reports, or (III) a Reduction in Authority or Responsibility resulting from the transactions contemplated by the Separation and Distribution Agreement to be entered into by and between Potlatch Corporation and the Corporation in connection with the spin-off of the Corporation, by themselves, shall not constitute a material Reduction in Authority or Responsibility, or

(B) Any reduction in the Eligible Employee’s Base Compensation, standard bonus opportunity or long term incentive opportunity or a fifteen percent (15%) or greater reduction in the Eligible Employee’s aggregate benefits or perquisites as compared to those of all other employees similarly situated, unless in each case the reduction is applicable to all salaried employees or all other employees similarly situated; provided, however, that this Section 5(a)(iv) shall apply to the Separation from Service of an Eligible Employee only if the Eligible Employee or the Participating Company has notified the other party in writing within three (3) months following the occurrence of any such change that the party giving notice

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considers such change to be a material change encompassed by this Section 5(a)(iv). If the party receiving such notice does not agree that the change in question is a material change encompassed by this Section 5(a)(iv), it shall give written notice thereof to the party first giving notice hereunder within thirty (30) days after receiving notice and the matter shall be immediately referred to the Appeals Committee; provided, however, that, within thirty (30) days after receiving written notice that the other party does not agree that the change in question is covered by this Section 5(a)(iv), the Eligible Employee may request that the matter be submitted directly to arbitration as provided in Section 11. If necessary, the twenty-four (24) month period specified above shall be extended to a date not later than thirty (30) days following (I) the announcement of the decision of the Appeals Committee or, if the matter is referred to arbitration within thirty (30) days following the announcement of the Appeals Committee’s decision, the announcement of the award of the arbitrator, or (II) if the matter is referred directly to arbitration, the announcement of the award of the arbitrator. The Participating Company or the Eligible Employee may each give the notice described in this Section 5(a)(iv) only once while this Program is in effect. If one party has given notice and the twenty-four (24) month period specified above has commenced running, the other party may not give notice hereunder with respect to a change occurring during such twenty-four (24) month period. If an Eligible Employee gives notice pursuant to this Section 5(a)(iv) and the Corporation thereafter in good faith makes an adjustment in the Eligible Employee’s compensation, benefits, assigned job or duties, responsibilities, privileges or perquisites, the Eligible Employee and the Corporation may mutually agree in writing that the notice shall be null and void.

Notwithstanding the foregoing, no benefits shall be available under the Program (i) if the Eligible Employee Separates from Service with a Participating Company because he or she is eligible for or receiving long-term or permanent disability benefits under the Corporation’s disability income plan as in effect on the date of onset of disability or (ii) if the Eligible Employee satisfies all of the following conditions:

(1) He or she Separates from Service on or after his or her Normal Retirement Date;

(2) For the two-year period immediately before retirement, he or she qualified as an Eligible Employee; and

(3) He or she is entitled to benefits under the Retirement Plan, Salaried 401(k) Plan and Supplemental Plan which, when converted to a straight life annuity (and excluding any portion of the benefit under the Salaried 401(k) Plan which represents contributions by the Eligible Employee), equals, in the aggregate, at least $44,000.

(b) Payment Of Change Of Control Benefits. An Eligible Employee will be eligible for the benefits specified in Section 4(b) if, within two (2) years following a Change of Control, the Eligible Employee Separates from Service under the conditions described in Section 5(a)(i), (ii) or (iii) or a material change described in Section 5(a)(iv) occurs and the Eligible Employee thereafter Separates from Service under the conditions described in Section 5(a)(iv); provided, that the Eligible Employee was employed by a Participating Company on the date preceding the Change of Control.

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(c) Limitations On Eligibility For Benefits.

(i) If an Eligible Employee is assigned from one to another Participating Corporation, he or she shall not be considered to have Separated from Service under the provisions of the Program.

(ii) The provisions of Section 5(a)(i) and 5(a)(ii) to the contrary notwithstanding, no benefit will be payable hereunder due to an Eligible Employee’s Separation from Service because of the sale to a third party or spin-off of a division (or other operating assets) of a Participating Company or to termination of the Eligible Employee’s employer’s status as a Participating Company upon the sale to a third party or spin-off of a designated subsidiary where such sale or spin-off is a change in the ownership or effective control of the Corporation or a change in the ownership of a substantial portion of the assets of the Corporation as defined in the regulations promulgated under Section 409A of the Code, if (A) (I) the Eligible Employee is employed by the purchaser of such division, assets, or subsidiary or such other spun-off entity or (II) such purchaser or spun-off entity is contractually obligated to offer the Eligible Employee the same or a better job and (B) such purchaser or spun-off entity is contractually obligated to maintain a plan which in all material respects is equivalent to the Program, providing for continuing coverage of the Eligible Employee for two (2) years following the sale or spin-off of such division, assets or subsidiary.

SECTION 6. TIME AND FORM OF BENEFIT.

(a) Time of Benefit. Except as provided in Sections 4(a), 4(b) and 6(b), distributions made to Eligible Employees will commence on the first payroll pay date following the Eligible Employee’s Separation from Service.

(b) Notwithstanding any other provision of the Program, a distribution made to Eligible Employee who is identified as a Key Employee at the time of his or her Separation from Service will be delayed for a minimum of six months if the Eligible Employee’s distribution is triggered by his or her Separation from Service. Any payment that otherwise would have been made except for the application of this Section 6(a) during such six-month period will be made in one lump sum payment not later than the last day of the next month following the month that is six months from the date the Eligible Employee Separates from Service. The determination of which Eligible Employees are Key Employees will be made by the Corporation in its sole discretion in accordance with this Section 6(a) and Sections 416(i) and 409A of the Code and the regulations promulgated thereunder.

(c) Form of Benefit. The benefits described in Section 4(a)(i) shall be paid in monthly installments over a period not to exceed twelve (12) months from the date the Eligible Employee Separates from Service pursuant to Section 4, as determined by the Corporation. The benefits described in Sections 4(a)(ii) and (iii) shall be paid in a lump sum. The benefits described in Sections 4(b)(i), (ii), (iii), (v) and (vi) shall be paid in a lump sum.

SECTION 7. EFFECT OF DEATH OF EMPLOYEE.

Should an Eligible Employee die after Separation from Service but while participating in the Program and prior to the payment of the entire benefit due hereunder, the balance of the

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benefit payable under the Program shall be paid in a lump sum to the estate of the Eligible Employee. Continued medical and dental coverage as provided in Section 4(a)(iv) and Section 4(b)(iv), as applicable, shall be available to the Eligible Employee’s surviving spouse only if and to the extent that such coverage would have been available to such surviving spouse if the Eligible Employee had died as an active salaried employee of a Participating Company. Such coverage shall be determined under the terms of the applicable plan as in effect on the earlier of (i) the date the Eligible Employee Separated from Service or (ii) the date of the Change of Control or the material change described in Section 5(a)(iv), if applicable.

SECTION 8. AMENDMENT AND TERMINATION.

The Committee reserves the right to amend or terminate the Program at any time and to increase or decrease the amount of any benefit provided under the Program; provided, however, that as to any individual who has qualified as an Eligible Employee and has become entitled to any Change of Control Benefit under Section 4(b), the Program cannot be terminated or amended to reduce any benefit provided under Section 4(b) or make any condition pertaining to qualification for the Change of Control Benefit under Section 4(b) materially more restrictive. Notwithstanding any other provision of the Program, following a Change of Control this Section 8 may not be amended for a period of three (3) years.

Notwithstanding the foregoing, the Vice President, Human Resources of the Corporation shall have the power and authority to amend the Plan with respect to any amendment that (i) does not materially increase the cost of the Plan to the Company or (ii) is required to comply with new or changed legal requirements applicable to the Plan, including, but not limited to, section 409A of the Code.

SECTION 9. CLAIMS PROCEDURE.

(a) Claims. All applications for benefits and all inquiries concerning claims under the program shall be submitted to the Corporation addressed as follows: “Clearwater Paper Corporation, Plan Administrator under the Clearwater Paper Corporation Severance Program for Executive Employees, 601 W. Riverside Avenue, Suite 1100, Spokane, Washington 99201.”

(b) Denial Of Claims. In the event that any application for benefits under the Program is denied in whole or in part, the Corporation shall notify the applicant in writing of such denial and shall advise the applicant of the right to a review thereof. Such written notice shall set forth, in a manner calculated to be understood by the applicant, specific reasons for such denial, specific references to the provisions of the Program on which such denial is based, a description of any information or material necessary for the applicant to perfect his or her application, an explanation of why such material is necessary and an explanation of the Program’s review procedure and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under section 502(a) of ERISA following a denial on review of the claim, as described in Section 10. Such written notice shall be given to the applicant within ninety (90) days after the Corporation receives the application, unless special circumstances require an extension of time up to an additional ninety (90) days for processing the application. If such an extension of time for processing is required, written notice of the extension shall be furnished to the applicant prior to the termination of the initial ninety

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(90) day period. This notice of extension shall indicate the special circumstances requiring the extension of time and the date by which the Corporation expects to render its decision on the application for benefits.

SECTION 10. REVIEW PROCEDURE.

(a) Appointment Of Appeals Committee. The Corporation shall appoint a Appeals Committee which shall consist of three (3) or more individuals who may (but need not) be employees of the Corporation; provided, however, that at all times following a Change of Control the Appeals Committee shall consist of at least three current (as of the effective date of the Change of Control) or former Corporation officers and directors. The Appeals Committee shall be the named fiduciary which shall have authority to act with respect to appeals from denials of benefits under the Program.

(b) Right To Appeal. Any person whose application for benefits is denied (or is deemed denied) in whole or in part (or such person’s authorized representative) may appeal the denial by submitting to the Appeals Committee a written request for review of the application within sixty (60) days after receiving written notice from the Corporation of the denial. The Corporation shall give the applicant (or the applicant’s representative) an opportunity to review pertinent documents in preparing such request for review.

(c) Form Of Request For Review. The request for review must be in writing and shall be addressed as follows: “Appeals Committee under the Clearwater Paper Corporation Severance Program for Executive Employees, 601 West Riverside Avenue, Suite 1100, Spokane, Washington 99201.” The request for review shall set forth all of the grounds upon which it is based, all facts in support thereof, and any other matters which the applicant deems pertinent. The Appeals Committee may require the applicant to submit such additional facts, documents or other material as the Appeals Committee may deem necessary or appropriate in making its review.

(d) Time For Appeals Committee Action. The Appeals Committee shall act upon each request for review within sixty (60) days after receipt thereof unless special circumstances require an extension of time of up to an additional sixty (60) days for processing the request for review. If such an extension of time for review is required, written notice of the extension shall be furnished to the applicant prior to the end of the initial sixty (60) day period.

(e) Appeals Committee Decision. Within the time prescribed in Section 10(d), the Appeals Committee shall give written notice of its decision to the applicant and to the Corporation. In the event the Appeals Committee confirms the denial of the application for benefits in whole or in part, such notice shall set forth, in a manner calculated to be understood by the applicant, the specific reasons for such denial, specific references to the provisions of the Program on which the decision was based, a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim, and a statement of the applicant’s right to bring a civil action under section 502(a) of ERISA. In the event that the Appeals Committee determines that the application for benefits should not have been denied in whole or in part, the Corporation shall take appropriate remedial action as soon as reasonably practicable after receiving notice of the Appeals Committee’s decision.

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(f) Section 5(a)(iv) Dispute. In the event that a dispute involving the application or interpretation of Section 5(a)(iv) is referred to the Appeals Committee as provided therein, the Appeals Committee shall treat such dispute as an appeal from the denial of a claim for benefits under this Program that is subject to all of the terms and conditions of this Section 10.

(g) Rules And _.Procedures. The Appeals Committee shall establish such rules and procedures, consistent with the Program and with ERISA, as it may deem necessary or appropriate in carrying out its responsibilities under this Section 10. The Appeals Committee may require an applicant who wishes to submit additional information in connection with an appeal from the denial of benefits in whole or in part to do so at the applicant’s own expense.

(h) Exhaustion of Remedies. No legal action for benefits under the Program may be brought until the claimant (i) has submitted a written application for benefits in accordance with the procedures described in Section 9, (ii) has been notified by the Corporation that the application is denied, (iii) has filed a written request for review of the application in accordance with the appeal procedures described in Section 10, and (iv) has been notified that the Appeals Committee has denied the appeal. Notwithstanding the foregoing, if the Corporation or the Appeals Committee does not respond to an Eligible Employee’s claim or appeal within the relevant time limits specified in Sections 9 and 10, the Eligible Employee may bring legal action for benefits under the Program pursuant to section 502(a) of ERISA.

SECTION 11. RESOLUTION OF DISPUTES INVOLVING SECTION 5.

(a) Arbitration Of Section 5 Dispute. Any dispute, controversy or question arising under Section 5 which is not resolved by the decision of the Appeals Committee (or which the Eligible Employee requests be submitted directly to arbitration as provided herein) shall be referred for decision by an arbitrator selected by the parties. The proceeding shall be governed by the Rules of the American Arbitration Association then in effect or such rules last in effect (in the event such Association is no longer in existence). If the parties are unable to agree upon such an Arbitrator within thirty (30) days after either party has given the other party written notice of its desire to submit the dispute, controversy or question for decision as aforesaid, then either party may apply to the American Arbitration Association for the appointment of an arbitrator or, if such Association is not then in existence or does not desire to act in the matter, either party may apply to the Presiding Judge of the Superior Court of the City and County of Spokane, State of Washington, for the appointment of an arbitrator to hear the parties and settle the dispute, controversy or question, and such Judge is authorized to make such appointment pursuant to the Program. The arbitration shall take place at the location mutually agreed to by the parties or, if the parties are unable to agree upon the location, at the location designated by the Arbitrator. The compensation and expenses of the Arbitrator shall be borne by the Corporation, unless the Arbitrator determines that an Eligible Employee acted willfully and maliciously in connection with his or her claim for benefits under the Program, in which case the Arbitrator shall direct the Eligible Employee to pay all or a portion of the compensation and expenses of the Arbitrator.

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(b) Arbitration Exclusive Remedy. Arbitration shall be the exclusive remedy for the settlement of disputes involving the application or interpretation of Section 5. The decision of the Arbitrator shall be final, conclusive and binding on all interested persons and no action at law or inequity involving the application or interpretation of Section 5 shall be instituted other than to enforce the award of the Arbitrator.

SECTION 12. BASIS OF PAYMENTS TO AND FROM PROGRAM.

All benefits under the Program shall be paid by the Corporation. The Program shall be unfunded and benefits hereunder shall be paid only from the general assets of the Corporation. Nothing contained in the Program shall be deemed to create a trust of any kind for the benefit of Eligible Employees, or create any fiduciary relationship between the Corporation and the Eligible Employees with respect to any assets of the Corporation. The Corporation is under no obligation to fund the benefits provided herein prior to payment, although it may do so if it chooses. Any assets which the Corporation chooses to use for advance funding shall not cause the Program to be a funded plan within the meaning of ERISA.

SECTION 13. NO EMPLOYMENT RIGHTS.

Nothing in the Program shall be deemed to give any individual the right to remain in the employ of a Participating Company or a subsidiary or to limit in any way the right of a Participating Company or a subsidiary to terminate an individual’s employment, which right is hereby reserved.

SECTION 14. NON-ALIENATION OF BENEFITS.

No benefit payable under the Program shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void.

SECTION 15. SUCCESSORS AND ASSIGNS.

The Program shall be binding on the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Program may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Program in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.

SECTION 16. NOTICES.

All notices pertaining to the Program shall be in writing and shall be deemed given if delivered by hand or mailed with postage prepaid and addressed, in the case of the Corporation to the address set forth in Section 9(a), attention of its Corporate Secretary, and the case of the Eligible Employee to his or her last known address as reflected in the records of the Corporation.

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EX-10.8

Exhibit 10.8

CLEARWATER PAPER CORPORATION

SALARIED SUPPLEMENTAL BENEFIT PLAN

Effective January 1, 2005

Amended and Restated as of December 16, 2008

CLEARWATER PAPER CORPORATION

SALARIED SUPPLEMENTAL BENEFIT PLAN

Effective January 1, 2005

Amended and Restated as of December 16, 2008

SECTION 1. INTRODUCTION.

(a) The Clearwater Paper Corporation Salaried Supplemental Benefit Plan (the “Plan”) is a restatement and continuation of the Potlatch Forest Products Corporation Supplemental Benefit Plan II, which was established by Potlatch Forest Products Corporation effective January 1, 2005. The purposes of the Plan are:

(i) to supplement benefits provided under the Retirement Plan to the extent such benefits are reduced due to the limits of section 401(a)(17) or 415 of the Code;

(ii) to provide retirement benefits that take into account deferred Incentive Plan awards;

(iii) to provide retirement benefits to certain executives calculated as if they received a standard bonus award under the Incentive Plan; and

(iv) to supplement benefits provided under the 401(k) Plan to the extent that a participant’s allocations of Company Contributions or Allocable Forfeitures are reduced due to the limits of section 401(a)(17), 401(k)(3), 401(m) or 415 of the Code or because the participant has deferred an Incentive Plan award.

(b) Pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation (the “EMA”), all accrued benefit liabilities under this Plan with respect to “Potlatch Employees” (as defined in the EMA) have been transferred to and assumed by the Potlatch Corporation Salaried Supplemental Benefit Plan II.

(c) Pursuant to the EMA, all accrued benefit liabilities under the Potlatch Corporation Salaried Employees’ Supplemental Benefit Plan (the “Prior Plan”) with respect to “Clearwater Employees” (as defined in the EMA) have been transferred to and assumed by this Plan. Certain provisions applicable to such transferred benefits are set forth in Addendum A. The benefits described in Addendum A are intended to be “grandfathered” from the application of section 409A of the Code.

(d) Notwithstanding the foregoing, any benefits that accrued under the Prior Plan with respect to Clearwater Employees before January 1, 2005 but that were unvested after December 31, 2004 and any benefits that accrued under the Prior Plan after December 31, 2004 are deemed to have accrued under this Plan and all such accruals are governed by the terms and conditions of this Plan as it may be amended from time to time.

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(e) This Plan is intended to be a deferred compensation plan, for the benefit of a select group of management or highly compensated employees of Clearwater Paper Corporation and its affiliates (the “Corporation”). The Corporation intends that the existence of a trust, if any, will not alter the characterization of the Plan as “unfunded” for purposes of ERISA, and will not be construed to provide income to the Participants under the Plan prior to actual payment of the vested accrued benefits hereunder. The Plan is intended to comply with the requirements of section 409A of the Code.

(f) Capitalized terms used in the Plan (other than those defined in Section 2 hereof) shall have the same meanings given to such terms in the Retirement Plan or the 401(k) Plan, as the context may require.

SECTION 2. DEFINITIONS.

(a) “Actuarial Equivalent” shall mean “actuarial equivalent” as defined in the Retirement Plan.

(b) “Affiliate” means any other entity which would be treated as a single employer with Potlatch under Section 414(b) or (c) of the Code, provided that, for purposes of determining whether a Separation from Service has occurred, in applying such Sections and in accordance with the rules of Treasury Regulations Section 1.409A-1(h)(3), the language “at least 50 percent” shall be used instead of “at least 80 percent.”

(c) “Board of Directors” or “Board” shall mean the Board of Directors of the Corporation.

(d) “Change of Control” shall mean

(i) Upon consummation of a merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of the Corporation (the “Outstanding Common Stock”) and the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

(B) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as

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amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(ii) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

(iii) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either

(A) the then Outstanding Common Stock, or

(B) the combined voting power of the Outstanding Voting Securities;

provided, however, that the following acquisitions shall not be deemed to be covered by this paragraph (iii):

(I) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation,

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(II) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or

(III) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2(d)(i); or

(iv) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

(v) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(f) “Committee” shall mean the Compensation Committee of the Board of Directors.

(g) “Corporation” shall mean Clearwater Paper Corporation.

(h) “Distribution” shall mean the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of Clearwater Paper Corporation then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and Clearwater Paper Corporation.

(i) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

(j) “401(k) Plan” shall mean the Clearwater Paper Salaried 401(k) Plan.

(k) “Identification Date” means each December 31.

(l) “Incentive Plan” means the Potlatch Corporation Management Performance Award Plan and Management Performance Award Plan II, the Clearwater Paper Corporation Annual Incentive Plan or any successor plan.

(m) “Key Employee” means a Participant who, on an Identification Date, is:

(i) An officer (a person holding the title of Vice President or higher, the Corporate Secretary, the Corporate Treasurer, the Controller, or other person designated as an officer by the Corporation or an Affiliate in its sole discretion) of the Corporation or an Affiliate having annual compensation greater than the

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compensation limit in section 416(i)(1)(A)(i) of the Code, provided that no more than fifty officers of the Corporation and its Affiliates shall be determined to be Key Employees as of any Identification Date;

(ii) A five percent owner of the Corporation; or

(iii) A one percent owner of the Corporation having annual compensation from the Corporation and its Affiliates of more than $150,000.

If a Participant is identified as a Key Employee on an Identification Date, then such Participant shall be considered a Key Employee for purposes of the Plan during the period beginning on the first April 1 following the Identification Date and ending on the next March 31.

(n) “Plan” shall mean this Clearwater Paper Corporation Salaried Supplemental Benefit Plan.

(o) “Prior Plan” shall mean the Potlatch Corporation Salaried Employees’ Supplemental Benefit Plan.

(p) “Retirement Plan” shall mean the Clearwater Paper Salaried Retirement Plan.

(q) “Separation from Service” or “Separates from Service” shall mean termination of an Employee’s service as an Employee consistent with Section 409A of the Code and the regulations promulgated thereunder. For purposes of the Plan, “Separation from Service” generally means termination of an Employee’s employment as a common-law employee of the Corporation and each Affiliate of the Corporation. A Separation from Service will not be deemed to have occurred if an Employee continues to provide services to the Corporation or an Affiliate in a capacity other than as an employee and if the former employee is providing a level of bona fide services that is fifty percent (50%) or more of the average level of services rendered, during the immediately preceding thirty-six (36) months of employment with the Corporation or Affiliate; provided, however, that a Separation from Service will be deemed to have occurred if it is reasonably anticipated that an Employee’s service with the Corporation and its Affiliates will terminate after a certain date or the level of bona fide services that the Employee will perform after such date (whether as an employee or another capacity) will permanently reduce to a rate that is less than twenty percent (20%) of the bona fide level of services rendered, on average, during the immediately preceding thirty-six (36) months (or if employed by the Corporation and its Affiliates less than thirty-six (36) months, such lesser period). However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual’s right to reemployment with the service recipient is provided either by statute or by contract. If the period of leave exceeds six months and the individual’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

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SECTION 3. ELIGIBILITY AND PARTICIPATION.

Participation in the Plan shall be limited to:

(a) All participants in the Retirement Plan whose benefits thereunder are reduced due to the limits of section 401(a)(17) of the Code (limiting the amount of compensation that may be taken into account under the Retirement Plan) or section 415 of the Code (limiting the annual benefits payable under the Retirement Plan);

(b) All participants in the Retirement Plan who are credited with deferred Incentive Plan awards;

(c) All participants in the Retirement Plan who otherwise participate in the Incentive Plan, who are officers of the Corporation and who are required by company policy to retire no later than the Normal Retirement Date; and

(d) All participants in the 401(k) Plan whose allocations of the Company Contributions or Allocable Forfeitures are reduced because the participant has deferred an Incentive Plan award or because of the limits of one or more of the following sections of the Code:

(i) section 401(a)(17) (limiting the amount of compensation that may be taken into account under the 401(k) Plan);

(ii) section 401(k)(3) (limiting participants’ Deferred Contributions to the 401(k) Plan);

(iii) section 401(m) (limiting participants’ Non-deferred Contributions and matching Company Contributions under the 401(k) Plan); or

(iv) section 415 (limiting overall annual allocations under the 401(k) Plan).

Any Employee with whom the Corporation has entered into a contract that provides benefits equivalent to any of the benefits described in this Plan shall not be eligible to participate in or receive benefits under this Plan to the extent of such equivalent benefits.

SECTION 4. AMOUNT OF PLAN BENEFITS.

A Participant’s Plan Benefit shall consist of (to the extent applicable to the Participant) (i) the Retirement Plan Supplemental Benefit and (ii) the 401(k) Plan Supplemental Benefit. All Plan Benefits shall accrue as of the last day of each Plan Year or as of the date, if earlier, on which the Participant Separates from Service.

(a) Retirement Plan Supplemental Benefit. A Participant’s Retirement Plan Supplemental Benefit shall be the amount determined under Subsection (i) below minus the amount determined under Subsection (ii).

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(i) All Participants. A Participant’s Retirement Plan Supplemental Benefit shall be the difference between

(A) the actual vested benefits payable under the Retirement Plan to the Participant and his or her joint annuitant (if any) and

(B) the vested benefits that would be payable under the Retirement Plan if (i) the limitations imposed by sections 401(a)(17) and 415 of the Code did not apply, (ii) any deferred Incentive Plan award credited to the Participant had been paid to the Participant in the year it was deferred and (iii) any benefits payable under Appendix F of the Retirement Plan were not included.

In the case of any Participant who is an officer of the Corporation and who is required by the corporate mandatory retirement policy to retire no later than the mandatory retirement date, the Retirement Plan Supplemental Benefit also shall include the difference, if any, between the amount determined in Subsection (B) and the vested benefits that would be payable under the Retirement Plan if modified as in Subsection (B) above and also modified so that the Incentive Plan awards credited to the Participant (both deferred and not deferred) which were recognized by the Retirement Plan in the Participant’s Final Average Earnings had been 100% of the Standard Bonus (as defined in the Incentive Plan, considering for this purpose, only those years during which the Participant was an officer of the corporation and was required to retire not later than the mandatory retirement date under the corporate mandatory retirement policy; provided, however, that for individuals who retire in an Award Year beginning on or after January 1, 2007, the Standard Bonus will be used to calculate Final Average Earnings only with respect to periods prior to January 1, 2007.

(ii) Prior Plan Offsets. A Participant’s Retirement Plan Supplemental Benefit shall be reduced by the Participant’s retirement plan supplemental benefit accrued under the Prior Plan.

(b) 401(k) Plan Supplemental Benefit. A Participant’s 401(k) Plan Supplemental Benefit shall be the vested amount credited to a bookkeeping account established pursuant to this Section 4(b). As of the last day of each Plan Year commencing after December 31, 2004, each Participant whose allocations for such Plan Year under the 401(k) Plan are reduced as described in Section 3(d) above and who has made the maximum Participating Deferred and Participating Non-deferred Contributions permitted under the 401(k) Plan for such Plan Year shall have an amount credited to such bookkeeping account. The amount so credited shall be the difference between the amount of Company Contributions and Allocable Forfeitures actually allocated to the Participant under the 401(k) Plan for such Plan Year and the amount of Company Contributions and Allocable Forfeitures that would have been allocated to the Participant under the 401(k) Plan for such Plan Year if the Participant had made Participating Contributions equal to six percent of the Participant’s Earnings (determined without regarding to section 401(a)(17) of the Code and without regard to the deferral of any Incentive Plan award otherwise payable).

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Through December 31 of the Plan Year preceding the Plan Year in which payment of the Participant’s entire 401(k) Plan Supplemental Benefit is made, the amount credited to such bookkeeping account shall be credited with earnings and losses based on the following:

(i) For periods prior to January 1, 2009, earnings shall be calculated using an interest rate equal to 70% of the higher of the following averages, compounded annually: (i) the prime rate charged by the major commercial banks as of the first business day of each month (as reported in an official publication of the Federal Reserve System) or (ii) the average monthly long-term rate of A-rated corporate bonds (as published in Moody’s Bond Record).

(ii) For periods on and after January 1, 2009 and prior to the date determined under Section 4(b)(iii), earnings shall be calculated using an interest rate equal to 120% of the long-term applicable federal rate, with quarterly compounding, as published under Section 1274(d) of the Code for the first month of each calendar quarter.

(iii) Effective as soon as practicable after January 1, 2009 as determined by the Committee or its delegate, for Participant groups identified by the Committee, earnings and losses shall be calculated by reference to the rate of return on one or more of the investment alternatives that are available under the 401(k) Plan and which are designated by the Committee as available under this Plan. Each Participant may select (in ten percent (10%) increments) which investment alternative(s) will be used for this purpose with respect to his or her bookkeeping account, and the alternative(s) selected need not be the same as the Participant has selected under the 401(k) Plan, but any such selection will apply only prospectively. The Committee shall determine how frequently such selections may be changed.

The Participant shall become vested in the Participant’s 401(k) Plan Supplemental Benefit upon the earliest of completion of two Years of Vesting Service, attainment of age 65 while an Employee, death while an Employee or Total and Permanent Disability.

SECTION 5. DISTRIBUTIONS OF PLAN BENEFITS.

Distributions of Plan benefits shall be made after the Participant Separates from Service pursuant to the following procedures. Notwithstanding the foregoing, distributions of certain benefits that were transferred to this Plan from the Prior Plan shall be governed solely by the provisions of Addendum A rather than this Section 5.

(a) Retirement Plan Supplemental Benefit. The Retirement Plan Supplemental Benefits shall be distributed beginning no later than ninety (90) days following the Participant’s attainment of age 55 or Separation from Service, whichever is later (the “Beginning Date”). If the Participant’s benefit is less than or equal to $50,000 (calculated as an Actuarial Equivalent lump sum of the amount payable at Normal Retirement) on the Beginning Date, the Participant’s benefit shall be paid in a lump sum.

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If the Participant’s benefit is greater than $50,000 (calculated as an Actuarial Equivalent lump sum of the amount payable at Normal Retirement) on the Beginning Date, the Participant’s benefit shall be paid in the form of an annuity. The Participant may elect the form of annuity payment from the forms available under the Retirement Plan, excluding the Social Security Adjustment option, not more than thirty days after the Beginning Date. A Participant’s Retirement Plan Supplemental Benefit which is paid in the form of annuity shall be subject to the same actuarial adjustments for form of payment applicable to Retirement Plan benefits. If a Participant’s Retirement Plan Supplemental Benefit is payable before the Participant is first eligible to receive benefits under the Retirement Plan, the Retirement Plan Supplemental Benefit will be calculated to be the Actual Equivalent of the amount payable at Normal Retirement.

If the Participant fails to make an annuity election pursuant to this Section 5(a), the vested Retirement Supplemental Benefit shall be distributed in the form of Joint & Survivor 50% Annuity or Single Life Annuity if the Participant is unmarried.

(b) 401(k) Plan Supplemental Benefit. By the later of (i) January 31^st of the calendar year immediately following the first calendar year in which the Participant first accrues a benefit under this Plan (or if earlier, thirty (30) days after first becoming eligible to participate in the Clearwater Paper Corporation Management Deferred Compensation Plan or any successor plan), or (ii) December 31, 2008, each Participant shall elect to receive distribution of the Participant’s vested 401(k) Plan Supplemental Benefit in ten or fewer annual installments or in a lump sum beginning in the Plan Year (but no later than March 15^th of such Plan Year) following the Plan Year in which the Participant Separates from Service by filing the prescribed form with the Corporation. This election shall be irrevocable. Distribution will be made in accordance with the Participant’s election except as provided below. The amount of any annual installment shall be determined by dividing the amount credited to the Participant’s bookkeeping account as of the last day of the Plan Year preceding the date of distribution of such installment by the total number of installments elected by the participant less the number of installments already paid. For purposes of the Plan, installment payments shall be treated as a single distribution under section 409A of the Code. All annual installment payments shall be payable no later than March 15^th of the payment year.

If the Participant fails to make an election pursuant to this Section 5(b), the vested 401(k) Plan Supplemental Benefit shall be distributed in a lump sum in the Plan Year (but no later than March 15^th of such Plan Year) following the Plan Year in which the Participant Separates from Service.

If a Participant dies before the Participant’s 401(k) Plan Supplemental Benefit has been completely distributed, such remaining benefit shall be distributed in a lump sum as soon as practicable thereafter to the person who is or would be the Participant’s Beneficiary under the 401(k) Plan.

Notwithstanding the foregoing, a lump sum distribution shall be made in the Committee’s (or its delegate’s) discretion to clear out a small balance held for the benefit of the Participant (or his or her Beneficiary) provided that the Committee’s (or its

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delegate’s) decision is evidenced in writing prior to the date of the distribution, the distribution is not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code and the payment results in the termination of all benefits due under the plan and all other “account balance plans” treated as a single nonqualified deferred compensation plan with this Plan under Treasury Regulation Section 1.409A-1(c)(2).

To the extent that no bookkeeping account has previously been established for a Participant and if the amount to be credited to the Participant’s account is less than $1,000 in a Plan year, then no 401(k) Plan Supplement Benefit bookkeeping account shall be established for the Participant in such Plan Year and the deferred amount shall be distributed to the Participant in cash not later than the end of the Plan Year following the Plan Year in which such amount was deferred.

(c) Delayed Distribution to Key Employees. Notwithstanding any other provision of this Section 5, distributions of the Retirement Plan Supplemental Benefit and the 401(k) Plan Supplemental Benefit accounts made to a Participant who is identified as a Key Employee at the time of his or her Separation from Service will be delayed for a minimum of six months if the Participant’s distribution is triggered by his or her Separation from Service. Any payment that otherwise would have been made pursuant to this Section 5 during such six-month period will be made in one lump sum payment, without adjustment for interest, not later than the last day of the second month following the month that is six months from the date the Participant Separates from Service. The determination of which Participants are Key Employees will be made by the Corporation in its sole discretion in accordance with this Section 5(c) and sections 416(i) (defining key employees) and 409A of the Code and the regulations promulgated thereunder.

(d) No Acceleration of Benefits. Notwithstanding any other provision of the Plan to the contrary, no distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in section 409A(a)(3) of the Code and regulations promulgated thereunder.

SECTION 6. MISCELLANEOUS.

(a) Forfeitures. Plan Benefits shall be forfeited under the following circumstances:

(i) If the Participant is not vested in the Retirement Plan Supplemental Benefit or 401(k) Plan Supplemental Benefit when the Participant Separates from Service; or

(ii) If the Participant is indebted to the Corporation or any Affiliate at the time the Participant or the Participant’s joint annuitant or other Beneficiary becomes entitled to payment of a Plan Benefit. In such a case, to the extent that the amount of the Plan Benefit does not exceed such indebtedness, the amount of such Plan Benefit shall be forfeited and the Participant’s indebtedness shall be extinguished to the extent of such forfeiture.

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(b) Funding. The Plan shall be unfunded, and all Plan Benefits shall be paid from the general assets of the Company or from assets held in a grantor trust that is subject to the claims of the Company’s general or judgment creditors.

(c) Tax Withholding. The Corporation shall make appropriate arrangements for satisfaction of any federal or state income tax or other payroll-based withholding tax required to be paid by the Participant upon the accrual or payment of any Plan Benefits.

(d) No Employment Rights. Nothing in the Plan shall be deemed to give any individual a right to remain in the employ of the Corporation or any affiliate or to limit in any way the right of the Corporation or an affiliate to terminate any individual’s employment with or without case, which right is hereby reserved.

(e) No Assignment of Rights.

(i) Except as otherwise provided in Section 6(a)(ii) with respect to a Participant’s indebtedness to the Corporation or an affiliate or in Section 6(e)(ii), the interest or rights of any person in the Plan or in any distribution to be made hereunder shall not be assigned (either at law or in equity), alienated, anticipated or subject to the attachment, bankruptcy, garnishment, levy, execution or other legal or equitable process. Any act in violation of this Section 6(e)(i) shall be void.

(ii) All or any portion of a Participant’s Plan Benefit hereunder shall be subject to the creation, assignment or recognition of a right under a state domestic relations order that is determined to be a “qualified domestic relations order” (within the meaning of section 414(p) of the Code) under the procedures established by the Corporation for the determination of the qualified status of domestic relations orders and for making distributions under qualified domestic relations orders.

(f) Administration. The Plan shall be administered by the Committee. The Committee (or its delegate) shall make such rules, interpretations and computations as it may deem appropriate, and any decision of the Committee (or its delegate) with respect to the Plan, including (without limitation) any determination of eligibility to participate in the Plan and any calculation of Plan Benefits, shall be conclusive and binding on all persons.

Within 30 days after a Change of Control, the Committee shall appoint an independent committee consisting of at least three current (as of the effective date of the Change of Control) or former Company officers and directors of the Corporation, which shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan.

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(g) Amendment and Termination.

(i) The Corporation expects to continue the Plan indefinitely. Future conditions, however, cannot be foreseen, and the Committee shall have the authority to amend or to terminate the Plan at any time. Notwithstanding the foregoing, the Vice President, Human Resources of the Corporation shall have the power and authority to amend the Plan provided that such amendment (i) does not materially increase the cost of the Plan to the Corporation or (ii) is required to comply with new or changed legal requirements applicable to the Plan, including, but not limited to, section 409A of the Code.

(ii) In the event of an amendment of the Plan, a Participant’s Plan Benefits shall not be less than the Plan Benefits to which the Participant would be entitled if the Participant had Separated from Service immediately prior to such amendment. In addition to the foregoing, the Plan may not be amended (including any amendment to this Section 6(g)) or terminated during the three-year period following a Change of Control if such amendment or termination would alter the provisions of this Section 6(g) or adversely affect a Participant’s accrued Plan Benefits.

(iii) Except as provided in Subsection (iv), in the event of termination of the Plan, the Participants’ Plan Benefits may, in the Committee’s discretion, be distributed within the period beginning twelve months after the date the Plan was terminated and ending twenty-four months after the date the Plan was terminated, or pursuant to Section 5, if earlier. If the Plan is terminated and the Plan Benefits are distributed, the Corporation, in compliance with section 409A of the Code shall terminate all account and non-account balance non-qualified deferred compensation plans with respect to all participants and shall not adopt a new account or non-account balance non-qualified deferred compensation plan for at least five years after the date the Plan was terminated.

(iv) The Committee may terminate the Plan upon a corporate dissolution of the Corporation that is taxed under section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1(A), provided that the Plan Benefits are distributed and included in the gross income of the Participants by the latest of (A) the Plan Year in which the Plan terminates or (B) the first Plan Year in which payment of the Plan Benefits is administratively practicable.

(h) Successors and Assigns. The Plan shall be binding upon the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.

(i) Claims and Review Procedure.

(i) Informal Resolution of Questions. Any Participant who has questions or concerns about his or her benefits under the Plan is encouraged to

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communicate with the Vice President, Human Resources. If this discussion does not give the Participant satisfactory results, a formal claim for benefits may be made within one year of the event giving rise to the claim in accordance with the procedures of this Section 6(i).

(ii) Formal Benefits Claim – Review by Appeals Committee. A Participant may make a written request for review of any matter concerning his or her benefits under the Plan. The claim must be addressed to the Appeals Committee, Salaried Employees’ Supplemental Benefit Plan II, Clearwater Paper Corporation, 601 W. Riverside Avenue, Suite 1100, Spokane, Washington 99201. The Corporation’s Appeals Committee shall decide the action to be taken with respect to any such request and may require additional information if necessary to process the request. The Appeals Committee shall review the request and shall issue its decision, in writing, no later than 90 days after the date the request is received, unless the circumstances require an extension of time. If such an extension is required, written notice of the extension shall be furnished to the person making the request within the initial 90-day period, and the notice shall state the circumstances requiring the extension and the date by which the Appeals Committee expects to reach a decision on the request. In no event shall the extension exceed a period of 90 days from the end of the initial period.

(iii) Notice of Denied Request. If the Appeals Committee denies a request in whole or in part, he shall provide the person making the request with written notice of the denial within the period specified in Subsection (ii) above. The notice shall set forth the specific reason for the denial, reference to the specific Plan provisions upon which the denial is based, a description of any additional material or information necessary to perfect the request, an explanation of why such information is required, and an explanation of the Plan’s appeal procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination to review.

(iv) Appeal to Appeals Committee.

(A) A person whose request has been denied in whole or in part (or such person’s authorized representative) may file an appeal of the decision in writing with the Appeals Committee within 60 days of receipt of the notification of denial. The appeal must be addressed to: Appeals Committee, Salaried Employees’ Supplemental Benefit Plan II, Clearwater Paper Corporation, 601 W. Riverside Avenue, Suite 1100, Spokane, Washington 99201. The Appeals Committee, for good cause shown, may extend the period during which the appeal may be filed for another 60 days. The appellant and his or her authorized representative shall be permitted to submit written comments, documents, records and other information relating to the claim for benefits. Upon request and free of charge, the applicant should be provided reasonable access to and copies of, all documents, records or other information relevant to the appellant’s claim.

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(B) The Appeals Committee’s review shall take into account all comments, documents, records and other information submitted by the appellant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Appeals Committee’s review shall not be restricted to those provisions of the Plan cited in the original denial of the claim.

(C) The Appeals Committee shall issue a written decision within a reasonable period of time but not later than 60 days after receipt of the appeal, unless special circumstances require an extension of time for processing, in which case the written decision shall be issued as soon as possible, but not later than 120 days after receipt of an appeal. If such an extension is required, written notice shall be furnished to the appellant with the initial 60-day period. This notice shall state the circumstances requiring the extension and the date by which the Appeals Committee expects to reach a decision on the appeal.

(D) If the decision on the appeal denies the claim in whole or in part written notice shall be furnished to the appellant. Such notice shall state the reason(s) for the denial, including references to specific Plan provisions upon which the denial was based. The notice shall state that the appellant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits. The notice shall describe any voluntary appeal procedures offered by the Plan and the appellant’s right to obtain the information about such procedures. The notice shall also include a statement of the appellant’s right to bring an action under section 502(a) of ERISA.

(E) The decision of the Appeals Committee on the appeal shall be final, conclusive and binding upon all persons and shall be given the maximum possible deference allowed by law.

(v) Exhaustion of Remedies. No legal or equitable action for benefits under the Plan shall be brought unless and until the claimant has submitted a written claim for benefits in accordance with Subsection (ii) above, has been notified that the claim is denied in accordance with Subsection (iii) above, has filed a written request for a review of the claim in accordance with Subsection (iv) above, and has been notified in writing that the Appeals Committee has affirmed the denial of the claim in accordance with Subsection (iv); provided, however, that an action for benefits may be brought after the Appeals Committee has failed to act on the claim within the time prescribed in Subsection (ii) and Subsection (iv), respectively.

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ADDENDUM A

SPECIAL PROVISIONS APPLICABLE TO BENEFITS TRANSFERRED FROM

THE POTLATCH CORPORATION SALARIED EMPLOYEES’

SUPPLEMENTAL BENEFIT PLAN (THE “PRIOR PLAN”)

The following provisions shall apply solely with respect to certain benefits transferred from the Prior Plan and assumed by this Plan pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation. This Addendum is intended to apply solely to benefits that were both accrued and vested prior to January 1, 2005, and earnings on such amounts, which benefits and earnings are “grandfathered” from the application of section 409A of the Code (collectively, the “Grandfathered Benefits”). Accordingly, this Addendum shall not apply to any benefits described in Section 1(e) of this Plan.

The Committee (or its delegate) shall cause separate recordkeeping accounts to be established under this Plan to account for such Grandfathered Benefits separately from other benefits accrued under this Plan. The following provisions, which are reproduced from Section 4 of the Prior Plan, shall apply solely to such Grandfathered Benefits in lieu of the provisions of Section 5 of this Plan. Each reference to the “Committee” in the following provisions shall be deemed to include any delegate that has been appointed to carry out the function allocated to the Committee.

DISTRIBUTIONS OF PLAN BENEFITS.

Distributions of Grandfathered Benefits shall be made in cash after the Participant ceases to be an Employee pursuant to the following procedures.

(a) Retirement Plan Supplemental Benefits. A Participant’s vested Retirement Plan Supplemental Benefit shall be payable to the Participant or to any other person who receives benefits under the Retirement Plan with respect to the Participant in the same form and at the same times as the Participant’s Retirement Plan benefit is paid. However, if the Participant elects to have the Retirement Plan benefit paid in an optional form and/or before the Participant’s Normal Retirement Date, the Committee may determine in its sole discretion that the Retirement Plan Supplemental Benefit shall be payable in the normal form and/or at the Normal Retirement Date notwithstanding the Participant’s election. A Participant’s Retirement Plan Supplemental Benefit shall be subject to the same actuarial adjustments for time and form of payment applicable to Retirement Plan benefits.

(b) 401(k) Plan Supplemental Benefit. A Participant may elect to receive distribution of the Participant’s vested 401(k) Plan Supplemental Benefit in 15 or fewer annual installments or in a lump sum beginning as soon as practicable after January 1 of the year following the year in which the Participant ceases to be an Employee by filing the prescribed form with the Committee. Distribution will be made in accordance with

16

the Participant’s election unless the Committee disapproves the election before the date distribution is to commence. The amount of any annual installment shall be determined by dividing the amount credited to the Participant’s bookkeeping account as of the last day of the month preceding the date of distribution of such installment by the total number of installments elected by the Participant less the number of installments already paid.

If the Participant fails to make an election pursuant to this subsection (b) or if the Committee disapproves the Participant’s election, the vested 401(k) Plan Supplemental Benefit shall be distributed in 15 annual installments beginning as soon as practicable after January 1 of the year following the year in which the Participant ceases to be an Employee, unless the Committee in its sole discretion determines that distribution shall be made in a single lump sum.

The Committee in its sole discretion may accelerate the distribution of installments upon the request of the Participant.

If a Participant dies before the Participant’s 401(k) Plan Supplemental Benefit has been completely distributed, such benefit shall be distributed in a lump sum as soon as practicable thereafter to the person who is or would be the Participant’s Beneficiary under the 401(k) Plan.

(c) Small Benefits. Notwithstanding any contrary provision of the Plan, if a Participant’s 401(k) Plan Supplemental Benefit or the present value of the Participant’s Retirement Plan Supplemental Benefit is less than $3,500 when the Participant ceases to be an Employee, such benefit shall be distributed in a single lump sum as soon as practicable after January 1 of the year following the year in which the Participant ceases to be an Employee. If a Participant is an Employee and the value of the Participant’s 401(k) Plan Supplemental Benefit is less than $3,500 on December 31, 1992, such benefit shall be paid to the Participant in a single lump sum on or about December 31, 1992. After December 31, 1992, a minimum allocation of $1,000 shall be required to establish a 401(k) Plan Supplemental Benefit account, and amounts less than such minimum shall be paid to the Participant in cash.

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EX-10.9

Exhibit 10.9

CLEARWATER PAPER CORPORATION

BENEFITS PROTECTION TRUST AGREEMENT

(Effective December 16, 2008)

TABLE OF CONTENTS

	Page
SECTION 1. DEFINITIONS	1
SECTION 2. CREATION OF TRUST; CONTRIBUTIONS	4
SECTION 3. PAYMENTS FROM THE TRUST	5
SECTION 4. MANAGEMENT OF TRUST ASSETS	7
SECTION 5. POWERS OF TRUSTEE	8
SECTION 6. TAXES, EXPENSES AND COMPENSATION OF TRUSTEE	9
SECTION 7. RECORDS AND ACCOUNTING	10
SECTION 8. INDEMNIFICATION	10
SECTION 9. ADMINISTRATION OF THE PLANS; COMMUNICATIONS	10
SECTION 10. RESIGNATION OR REMOVAL OF TRUSTEE	10
SECTION 11. AMENDMENT OF AGREEMENT; TERMINATION OF TRUST	12
SECTION 12. GOVERNING LAW; SEVERABILITY	12

i

CLEARWATER PAPER CORPORATION

BENEFITS PROTECTION TRUST AGREEMENT

Effective December 16, 2008

This Trust Agreement, by and between CLEARWATER PAPER CORPORATION, a Delaware corporation (the “Corporation”) and U.S. BANK NATIONAL ASSOCIATION (the “Trustee”), is effective as of December 16, 2008.

WITNESSETH:

Whereas the Corporation has adopted the nonqualified plans, programs and policies and has entered into the contracts listed on Schedule 1 (collectively, the “Plans”) and may adopt or enter into other such plans, programs, policies and contracts which will be listed from time to time on Schedule 1; and

Whereas the Corporation’s obligations pursuant to the Plans are not funded or otherwise secured and the Corporation desires to take steps to assure that, subject to the claims of the Corporation’s general creditors, the future payment of amounts under the Plans will not be improperly withheld in the event that a Change of Control (as hereinafter defined) of the Corporation should occur;

Now, Therefore, the Corporation and the Trustee agree as follows:

SECTION 1. DEFINITIONS

(a) “Benefit Commitments” means:

(i) all benefits that are accrued or payable (whether on a current or deferred basis) under the Plans as of the date of the Change of Control and

(ii) all benefits that may become payable under the Plans as in effect on the date of the Change of Control as a result of termination of a participant’s employment after such Change of Control, as described in Section 2(d).

(b) “Change of Control” means:

(i) Upon consummation of a merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of the Corporation (the “Outstanding Common Stock”) and the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined

1

voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

(B) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(ii) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

(iii) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either

(A) the then Outstanding Common Stock, or

(B) the combined voting power of the Outstanding Voting Securities;

2

provided, however, that the following acquisitions shall not be deemed to be covered by this paragraph (iii):

(I) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation,

(II) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or

(III) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 1(b)(i); or

(iv) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

(v) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

(c) “Corporation” means Clearwater Paper Corporation, a Delaware corporation, and its successor and assigns.

(d) “Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of the Corporation then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and the Corporation.

(e) “Independent Administrator” means an independent professional benefits consulting or administrative firm appointed pursuant to Section 3(b).

(f) “Insolvent” means that the company is unable to pay its debts as they mature or is subject to a pending proceeding as a debtor under the Bankruptcy Code.

(g) “Participants” mean the active and former directors and employees of the Corporation or its subsidiaries or affiliates who are entitled to benefits under the Plans.

(h) “Plans” mean the nonqualified plans, programs, policies and contracts listed on Schedule 1 adopted or maintained by the Corporation or a subsidiary or affiliate of the Corporation. The Corporation may from time to time add to or delete items from Schedule 1 by notifying the Trustee in writing; provided, however, that no such change to Schedule 1 may be made after a Change of Control has occurred. The Corporation shall provide the Trustee with a current copy of each Plan and any amendments thereto.

(i) “Trust” means the Clearwater Paper Corporation Benefits Protection Trust established pursuant to this Agreement.

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(j) “Trustee” means U.S. Bank National Association, or any successor trustee appointed pursuant to Section 10.

(k) “Trust Fund” means all moneys, securities and other property held by the Trustee under the Trust.

SECTION 2. CREATION OF TRUST; CONTRIBUTIONS

(a) Concurrently with the execution of this Agreement, the Corporation deposited with the Trustee $100 in cash. From time to time the Corporation shall also deposit with the Trustee such contributions as may be permitted or required pursuant to Sections 2(c) and 2(d) of this Agreement. All such contributions and all accumulations and accruals, and the earnings and income with respect thereto, shall be held by the Trustee in trust pursuant to this Agreement and shall be invested, reinvested and applied as provided herein. The Trustee hereby accepts being named as Trustee under this Agreement and agrees to hold the Trust Fund subject to all of the terms and conditions hereof.

(b) The Trust established hereunder shall be revocable by the Corporation at any time before a Change of Control, but shall be irrevocable upon and after a Change of Control. The Trust is intended at all times to be a grantor trust as described in section 671 of the Internal Revenue Code of 1986, as amended, and all income earned on the assets of the Trust Fund shall be taxable to the Corporation, whether before or after the Trust becomes irrevocable. All taxes with respect to the Trust shall be payable by the Corporation from its separate funds and shall not be charged against the Trust Fund.

(c) The Corporation, with the concurrence of the Trustee, may at any time deposit with the Trustee cash or marketable securities to be credited to the Trust Fund.

(d) Within 30 days after a Change of Control has occurred, the Corporation shall deposit with the Trustee cash or marketable securities (other than stock or debt obligations of the Corporation) to be credited to the Trust Fund in an amount which, when added to any funds already credited to the Trust Fund, the Corporation reasonably determines will be at least sufficient to pay:

(i) the Benefit Commitments, and

(ii) all anticipated future expenses of the Trust Fund, including the fees and expenses of the Trustee described in Section 6(b).

(e) At least annually after a Change of Control, the Independent Administrator shall retain an actuary to re-determine the amount determined pursuant to (d) above. Such re-determination shall be performed using the factors and assumptions set forth in Schedule 2. If the current fair market value of the assets of the Trust Fund does not equal or exceed 110% of the amount so re-determined, the Independent Administrator shall so advise the Corporation and the Corporation shall, within 30 days after receiving such notice, make an irrevocable contribution to the Trust equal to the excess of the re-determined amount over the current fair market value of the assets of the Trust Fund.

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(f) The Trustee shall not be responsible for the computation or collection of any contribution to the Trust Fund.

(g) Notwithstanding the provision of the Trust to the contrary, in order to comply with Section 409A(b) of the Internal Revenue Code of 1986 as amended (the “Code”), the following rules shall apply:

No assets will become restricted to the provision of benefits in connection with a change in the Corporation’s financial health or the occurrence of a “restricted period” as defined in Section 409A(b)(3)(B), and no contributions shall be made to the Trust for the purpose of paying deferred compensation to an “applicable covered employee” as defined in Section 409A(b)(3)(D) of the Code under a nonqualified deferred compensation plan during such restricted period. In the event that contributions are made during a restricted period for the benefit of persons other than “applicable covered employees,” the Trustee shall establish such sub-accounts as necessary to separate funding contributed for the benefit of “applicable covered employees” and other persons.

SECTION 3. PAYMENTS FROM THE TRUST

(a) Upon the effective date of this Agreement, the Corporation shall furnish the Trustee with written information regarding the Participants and their beneficiaries under the Plans and the dates of distribution and amounts of benefits under the Plans and shall update such information on a regular basis.

(b) The Corporation shall have the duty to notify the Trustee if a Change of Control occurs. If the Corporation fails to provide such notice and the Trustee has a reasonable basis for believing that a Change of Control has occurred, then the Trustee shall be authorized to act under this section as if the Corporation had provided such notice. After a Change of Control, the Corporation shall: (i) within 30 days furnish to the Trustee the information described in (a) above with respect to the Benefit Commitments which are then payable under the Plans; (ii) update such information with respect to all Plans not less frequently than annually; (iii) furnish the Trustee with any other information the Trustee may reasonably request within 30 days after such request; and (iv) within 30 days following the Change of Control, appoint an Independent Administrator which shall assume responsibility for the administration of the Plans and provide such information and assistance as may be necessary or appropriate to assist the Independent Administrator to carry out its duties in connection with the Plans.

(c) Before a Change of Control, the Trustee shall make payments from the Trust Fund to Participants and their beneficiaries under the Plans if so directed by the Corporation. The Corporation may withdraw funds from the Trust Fund for any purpose at any time before a Change of Control.

(d) After a Change of Control the Trustee shall pay the Benefit Commitments to the Participants and their beneficiaries in the amounts and at the time directed by the Independent Administrator.

(e) Except as provided in Section 11(d), no funds shall be paid to the Corporation after a Change of Control unless the Trustee determines in its sole discretion that the funds will never be required to pay Benefit Commitments under the Plans and expenses of the Trust Fund and the Independent Administrator.

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(f) After a Change of Control, the Trustee shall pay benefits (including, without limitation, benefits accruing on account of services rendered after the date of the applicable event or on account of a period of employment after the applicable event) under the Plans in excess of the Benefit Commitments only if the Corporation deposits additional cash or marketable securities sufficient to pay such excess benefits or the Trustee determines in its sole discretion that the Trust Fund is sufficient to pay all Benefit Commitments, expenses of the Trust Fund and such excess benefits, and the Corporation agrees in writing that it will not make a request pursuant to Section 3(e) prior to the termination of the Trust that the Trustee make a distribution of funds in excess of the amount necessary to pay the Benefit Commitments and Trust Fund expenses.

(g) Payments to Participants and their beneficiaries pursuant to Sections 3(c) and 3(d) shall be made by the Trustee to the extent that funds in the Trust Fund are sufficient for such purpose. In any month in which the Trustee determines that the Trust Fund does not have sufficient funds to provide for the payment of all benefits due in such month under the Plans, the amount otherwise payable to each such Participant or beneficiary during such month shall be reduced proportionately; provided, however, that after a Change of Control any payments in excess of the Benefit Commitments shall be reduced as necessary or completely terminated before payment of any Benefit Commitments shall be reduced.

(h) Notwithstanding any other provisions of this Agreement, if before or after a Change of Control the Trustee is notified by the Corporation or the Trustee has a reasonable basis for believing that the Corporation is Insolvent, the Trustee shall discontinue benefit payments from the Trust Fund and shall hold the assets of the Trust Fund to satisfy the claims of the Corporation’s general and judgment creditors. For this purpose, the knowledge of any of its affiliates shall not be imputed to the Trustee. The Trustee shall resume benefit payments only after determining that the Corporation is not Insolvent or as directed by a court of competent jurisdiction.

(i) The Corporation shall have the duty to notify the Trustee if the Corporation becomes Insolvent. Except as provided in the next sentence, the Trustee shall have no duty to inquire whether the Corporation is Insolvent. If a person claiming to be a creditor of the Corporation alleges in writing to the Trustee that the Corporation is Insolvent, the Trustee shall independently determine or, within 30 days after receipt of such notice, shall petition a court to determine whether the Corporation is Insolvent and shall suspend benefit payments pending such determination. The Corporation shall promptly provide all information reasonably requested by the Trustee to enable the Trustee or the court to make such determination.

(j) If the Trustee discontinues or suspends benefit payments under Section 3(h) or 3(i) and subsequently resumes such payments, the first payment following such discontinuance or suspension shall include the aggregate amount of all payments that would have been made during the period of discontinuance or suspension, less any payments made by the Corporation to the Participant or beneficiary pursuant to the Plans during such period, together with interest equal to 120% of the long-term applicable federal rate, with quarterly compounding, as published under Section 1274(d) of the Code for the first month of each calendar quarter.

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(k) No Participant or beneficiary shall have any claim on or beneficial ownership interest in any assets of the Trust Fund before such assets are paid to the Participant or beneficiary, and all rights created under the Plans shall be unsecured contractual rights against the Corporation.

SECTION 4. MANAGEMENT OF TRUST ASSETS

(a) Prior to a Change of Control, the Trust Fund shall be held, invested and reinvested by the Trustee as directed in writing by the Corporation from time to time.

(b) After a Change of Control, the Trustee shall have exclusive authority and discretion to manage and control the Trust Fund and may employ investment managers (including affiliates of the Trustee) to manage the investment of the Trust Fund. In exercising such authority and discretion, the Trustee shall be guided by the investment policy guidelines established by the Corporation for this purpose.

The Trustee shall discharge its investment duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

(c) In no event shall assets of the Trust Fund be invested in debt obligations of the Corporation.

(d) To the fullest extent permitted by law, the Trustee is expressly authorized to:

(i) retain the services of a registered broker-dealer organization hereafter affiliated with U.S. Bank National Association, and any future successors in interest thereto (collectively for the purposes of this paragraph referred to as the “Affiliated Entities”), to provide services to assist in or facilitate the purchase or sale of investment securities in the Trust,

(ii) acquire as assets of the Trust shares of mutual funds to which Affiliated Entities provides, for a fee, services in any capacity and

(iii) acquire in the Trust any other services or products of any kind or nature from the Affiliated Entities regardless of whether the same or similar services or products are available from other institutions.

The Trust may directly or indirectly (through mutual funds fees and charges, for example) pay management fees, transaction fees and other commissions to the Affiliated Entities for the services or products provided to the Trust and such mutual funds at such Affiliated Entities’ standard or published rates without offset (unless required by law) from any fees charged by the Trustee for its services as Trustee.

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The Trustee may also deal directly with the Affiliated Entities regardless of the capacity in which it is then acting, to purchase, sell, exchange or transfer assets of the Trust even though the Affiliated Entities are receiving compensation or otherwise profiting from such transaction or are acting as a principal in such transaction.

(e) Each of the Affiliated Entities is authorized to

(i) effect transactions on national securities exchanges for the Trust as directed by the Trustee, and

(ii) retain any transactional fees related thereto, consistent with Section 11(a)(1) of the Exchange Act, as amended, and related Rule 11a2-2(T).

(iii) Included specifically, but not by way of limitation, in the transactions authorized by this provision are transactions in which any of the Affiliated Entities are serving as an underwriter or member of an underwriting syndicate for a security being purchased or are purchasing or selling a security for its own account. In the event the Trustee is directed by the Corporation or any designated investment manager, as applicable hereunder (collectively referred to for purposes of this paragraph as the “Directing Party”), the Directing Party shall be authorized, and expressly retains the right hereunder, to direct the Trustee to retain the services of, and conduct transactions with, Affiliated Entities fully in the manner described above.

SECTION 5. POWERS OF TRUSTEE

Subject to Sections 3 and 4, the Trustee shall have full power and authority with respect to any and all moneys, securities and other property at any time received or held in the Trust Fund to do all such acts, take all such proceedings and exercise all such rights and privileges, whether herein specifically referred to or not, as could be done, taken or exercised by the absolute owner thereof, including, without in any way limiting the generality of the foregoing, the following:

(a) To collect and receive the income of the Trust Fund and to invest and reinvest the Trust Fund in investments of any kind;

(b) To pay the expenses of the Trust (excluding any taxes payable by the Corporation under Section 2(b)) out of the Trust Fund, including the fees and reasonable expenses of the Independent Administrator and including reasonable compensation for its services as Trustee (if and to the extent that the Corporation does not pay such expenses and compensation);

(c) To employ suitable agents and counsel, and pay their reasonable expenses and compensation out of the Trust Fund (if and to the extent that the Corporation does not pay such expenses and compensation);

(d) To sell, convey, exchange or otherwise dispose of any property at any time held in trust hereunder;

(e) To hold uninvested any cash contributions to the Trust Fund and to create reserves of cash or other assets of the Trust Fund in the banking department of any affiliate of the

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Trustee, without liability for interest thereon, for the payment of expenses, or for distributions pursuant to the Plans, or for any other purpose in connection with the Plans, notwithstanding the affiliate’s receipt of “float” from such uninvested cash;

(f) To deposit any moneys at any time held in the Trust Fund in any savings bank, in the savings department of any bank or in a banking affiliate of the Trustee;

(g) To invest assets of the Trust Fund in any mutual funds advised by the Trustee or any of its affiliates or for which an affiliate of the Trustee acts as a custodian or other service provider and to receive management fees from such mutual funds for services performed for such funds;

(h) To have, respecting bonds, shares of corporate stock and other securities, all the rights, powers and privileges of an owner, including holding securities in the name of the Trustee or in the name of a nominee securities depository with or without disclosure of the Trust, voting any corporate stock either in person or by proxy, with or without power of substitution, making payment of calls, assessments or other sums deemed by the Trustee expedient for the protection of the Trust Fund, exchanging securities, selling or exercising stock subscriptions or conversion rights, participating in foreclosures, reorganizations, consolidations, mergers, liquidations, pooling agreements, voting trusts, and assenting to corporate sales, leases and encumbrances. The Trustee may provide to the Corporation (or, after a Change of Control, to the Independent Administrator) the proxy of any security when in the Trustee’s judgment the Trustee or one of its affiliates may have a conflict of interest;

(i) To enter into any contracts with, or purchase any annuities from, any insurance company or insurance companies for the purpose of providing for distributions under the Plans; and

(j) To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust or the Trust Fund; to commence or defend legal proceedings for or against the Trust; and to represent the Trust in all proceedings in any court of law or equity or before any other body or tribunal.

SECTION 6. TAXES, EXPENSES AND COMPENSATION OF TRUSTEE

(a) The Corporation shall pay any federal, state, local or other taxes imposed with respect to the assets or income of the Trust Fund. At the direction of the Corporation (or, following a Change of Control, at the direction of the Independent Administrator), the Trustee shall deduct any payroll or income taxes required to be withheld from any payments made to Participants or their beneficiaries from the Trust Fund.

(b) The fees and expenses of the Trustee may be revised from time to time as agreed to by the parties. The Trustee’s reasonable expenses, including but not limited to the retention of legal counsel, accountants and actuaries and such other professionals as the Trustee determines are necessary or appropriate to enable it to perform its services as Trustee, shall be charged to and payable from the Trust Fund on a monthly basis, or on such other basis as the Trustee deems reasonable, except to the extent that such fees and expenses are paid by the Corporation.

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SECTION 7. RECORDS AND ACCOUNTING

(a) The Trustee shall keep accurate and detailed records and accounts with respect to all assets included in the Trust Fund and all investments, receipts and disbursements and other transactions involving the Trust, except that the Corporation shall maintain all accounts for Participants and their beneficiaries as provided in the Plans. All accounts, books and records maintained by the Trustee shall be open to inspection by any person designated by the Corporation at all reasonable times.

(b) Within 60 days following the close of each calendar year or the date of removal or resignation of the Trustee or termination of the Trust, the Trustee shall file with the Corporation a written report setting forth all investments, receipts, disbursements and other transactions effected by it during the calendar year or part thereof for which the report is filed, in such form as the Corporation and the Trustee shall agree. The Trustee also shall render such additional statements or reports to the Corporation as the Corporation may reasonably request from time to time.

SECTION 8. INDEMNIFICATION

The Corporation shall indemnify and hold the Trustee harmless from and against any liability that the Trustee may incur in the administration of the Trust (including reasonable attorneys’ fees), unless arising from the Trustee’s own gross negligence, willful misconduct, or willful breach of the provisions of or its obligations under this Agreement. The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this trust agreement, except as required by law.

SECTION 9. ADMINISTRATION OF THE PLANS; COMMUNICATIONS

(a) The Corporation shall administer the Plans as provided therein and subject to Section 3(d), the Trustee shall not be responsible in any respect for administering the Plans. The Trustee shall not be responsible for the adequacy of the Trust Fund to meet and discharge all payments and liabilities under the Plans.

(b) Any action of the Corporation, or if applicable, the Independent Administrator under any provision of this Agreement shall be evidenced by a written instrument signed by an authorized agent of the Corporation or if applicable, the Independent Administrator. The Corporation, or if applicable, the Independent Administrator shall furnish the Trustee from time to time with evidence satisfactory to the Trustee as to the agents authorized to sign such instruments.

SECTION 10. RESIGNATION OR REMOVAL OF TRUSTEE

(a) The Trustee may resign at any time and for any reason before a Change of Control upon written notice to the Corporation. After receipt of such written notice, the Corporation shall appoint a successor trustee that will become Trustee upon its acceptance of the Trust. The Trustee’s resignation shall become effective upon the earlier of the date six months after such written notice is provided or the date the successor trustee is appointed by the Corporation and accepts the Trust. The Trustee shall have no duty to find or secure the appointment of a successor upon its resignation pursuant to this Section 10(a).

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(b) After a Change of Control, the Trustee may resign at any time and for any reason upon written notice to the Corporation, and, if applicable, the Independent Administrator. Such resignation shall become effective only if:

(i) The Trustee has obtained the agreement of a bank to act as successor trustee which bank

(A) is among the 100 largest banks in the United States, as measured by deposits,

(B) has a rating of “B/C” or greater based upon the most current rating from Keefe, Bruyett & Woods (“KB&W’) or its successor, or if KB&W or its successor should cease to publish ratings, then a short-term debt rating from Moody’s of “P-1” or greater, or from Standard and Poor’s of “A-1” and

(C) has no present commercial banking relationship with the Corporation or any of its subsidiaries, affiliates or successors; or

(ii) A court of competent jurisdiction has appointed a successor trustee, but only after the Trustee has used its best efforts to find a successor pursuant to (i) above.

The Trustee shall continue to be trustee of the Trust Fund until the new trustee is in place, and the Trustee shall be entitled to expenses and fees (including expenses incurred in finding a successor trustee or petitioning a court to name a successor trustee) through the later of the effective date of its resignation as Trustee or the end of its custodianship of the Trust Fund.

(c) Prior to a Change of Control, the Corporation may remove the Trustee upon 30 days written notice to the Trustee, or upon such shorter period as is acceptable to the Trustee. Such removal shall become effective, however, only upon the occurrence of all of the following events:

(i) The appointment by the Corporation of a successor trustee;

(ii) The acceptance of the Trust by the successor trustee; and

(iii) The delivery of the Trust Fund to the successor trustee.

(d) Following a Change of Control, the Independent Administrator, if it agrees to assume such power and responsibility, may remove the Trustee by following the steps prescribed for the Corporation in (c) above.

(e) Upon designation or appointment of a successor trustee, the Trustee shall transfer the Trust Fund to the successor trustee reserving such reasonable sums as the Trustee shall deem necessary to defray its expenses in settling its accounts and to pay any of its compensation due and unpaid. If the sums so reserved are not sufficient for these purposes, the Trustee shall be entitled to recover the amount of any deficiency from either the Corporation or the Trust Fund held by the successor trustee, or both.

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SECTION 11. AMENDMENT OF AGREEMENT; TERMINATION OF TRUST

(a) The Corporation shall have the right at any time prior to a Change of Control to amend this Agreement by an instrument in writing duly executed and delivered to the Trustee, or to terminate the Trust; provided, however, that the duties, powers and liabilities of the Trustee hereunder shall not be substantially changed without its written consent.

(b) The provisions of this Agreement and the Trust created hereby may not be amended or terminated by the Corporation after a Change of Control. The Trustee, after a Change of Control, may amend the provisions of this Agreement to the extent required by applicable law.

(c) In the event the Corporation terminates the Trust prior to the occurrence of a Change of Control, the Trustee shall reserve such sums as it deems necessary to pay its fees and expenses, and shall distribute all remaining assets of the Trust Fund in accordance with the written directions of the Corporation.

(d) The Trust shall be terminated upon the earlier of the exhaustion of the Trust Fund or the final payment of all amounts payable to all of the Participants and their beneficiaries pursuant to the Plans, and the payment of all amounts due to the Trustee and all costs and expenses chargeable to the Trust. Promptly upon termination of this Trust, and after payment of all fees, expenses and indemnities due to or incurred by the Trustee hereunder, any remaining portion of the Trust Fund shall be paid to the Corporation.

SECTION 12. GOVERNING LAW; SEVERABILITY

(a) This Agreement shall be construed and enforced in accordance with the laws of the State of Washington.

(b) Any provision of this Agreement that is determined to be invalid or unenforceable shall be ineffective without invalidating the remaining provisions hereof.

(c) This Agreement shall have binding effect on the successors and assigns of the Corporation and on all parent and subsidiary companies related to any such successor or assign.

(d) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by and delivered to each of the parties hereto.

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IN WITNESS WHEREOF, the parties hereto have caused this amended and restated Agreement to be executed by their duly authorized officers as of the day and year first above written.

CLEARWATER PAPER CORPORATION
By:	/s/ Thomas H. Carter
By:	/s/ Jenni Hogaboon
	U.S. BANK NATIONAL ASSOCIATION

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Schedule 1

The Plans

Clearwater Paper Corporation Salaried Supplemental Benefit Plan

Clearwater Paper Corporation Annual Incentive Plan

Clearwater Paper Corporation Deferred Compensation Plan for Directors

Clearwater Paper Corporation Management Deferred Compensation Plan *

Clearwater Paper Corporation Severance Program for Executive Employees

Clearwater Paper Salaried Severance Plan **

Deferred Compensation Agreement Between Potlatch Corporation and Richard N. Congreve dated as of December 2, 1982, as amended

Severance and/or Employment Agreements:

Beech, John M.

Collier, James R.

Congreve, Richard N.

DeBorde, Robert M.

Fleshman, Nancy (survivor of James Fleshman)

Morton, G. William

Saarela, Edward G.

* The contributions made to the Trust Fund by the Corporation with respect to Directed Investment Accounts under the Management Deferred Compensation Plan shall be held in separate sub-accounts and the provisions of Section 3 shall apply separately to such sub-accounts.

** The contributions made to the Trust Fund by the Corporation with respect to the Salaried Severance Plan shall be held in a separate sub-account and the provisions of Section 3 shall apply separately to such sub-account.

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Schedule 2

Summary of Funding Methods and Assumptions for

Severance Contracts, Employment Agreements and

Retirement Plan Supplemental Benefit

Discount Rate

Discount rate will be determined using the discount rate to determine Clearwater Paper Salaried Retirement Plan benefits for the fiscal year in which a Change of Control occurs.

Termination and Retirement

All active participants terminate two years after the valuation date, or immediately, if that produces a higher liability. Benefit payments begin at the earliest retirement date following termination.

Mortality

No mortality before retirement. Post-retirement mortality using RP-2000 mortality table.

Trust Expenses

5% of liabilities

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EX-10.10

Exhibit 10.10

CLEARWATER PAPER CORPORATION

DEFERRED COMPENSATION PLAN FOR DIRECTORS

Effective December 16, 2008

CLEARWATER PAPER CORPORATION

DEFERRED COMPENSATION PLAN FOR DIRECTORS

Effective December 16, 2008

1. ESTABLISHMENT AND PURPOSE.

(a) The Clearwater Paper Corporation Deferred Compensation Plan for Directors was adopted effective December 16, 2008, by the Board of Directors of Clearwater Paper Corporation to provide Directors of Clearwater Paper Corporation an opportunity to defer payment of their Director’s Fees. The Plan is also intended to establish a method of paying Director’s Fees, which will assist the Corporation in attracting and retaining persons of outstanding achievement and ability as members of the Board of Directors of the Corporation.

(b) Deferred Equity-Based Awards, as defined herein, are subject to the terms and conditions of this Plan.

(c) The Plan is intended to comply with the requirements of Section 409A of the Code.

2. DEFINITIONS.

(a) “Affiliate” means any other entity which would be treated as a single employer with the Corporation under Section 414(b) or (c) of the Code.

(b) “Beneficiary” means the person or persons designated by the Director to receive payment of the Director’s Deferred Compensation Account in the event of the death of the Director.

(c) “Board” and “Board of Directors” means the board of directors of the Corporation.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Committee” means the Nominating and Corporate Governance Committee of the Board.

(f) “Corporation” means Clearwater Paper Corporation, a Delaware corporation.

(g) “Deferred Compensation Account” means the bookkeeping account established pursuant to section 6 on behalf of each Director who elects to participate in the Plan.

(h) “Deferred Equity-Based Award” means an award of Director compensation payable on a deferred basis in the form of Stock Units under the Plan and without regard to a Director’s election to participate and defer Director’s Fees under the Plan.

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(i) “Director” means a member of the Board of Directors who is not an employee of the Corporation or any subsidiary thereof.

(j) “Director’s Fees” means the amount of compensation paid by the Corporation to a Director for his or her services as a Director, including an annual retainer and any amount payable for attendance at a Board meeting or any Board committee meeting. “Director’s Fees” shall not include Deferred Equity-Based Awards, or any reimbursement by the Corporation of expenses incurred by a Director incidental to attendance at a Board meeting or a Board committee meeting or of any other expense incurred on behalf of the Corporation.

(k) A Director shall be considered “Disabled” if the Director is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.

(l) “Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of the Corporation then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and the Corporation.

(m) “Dividend Equivalent” means an amount equal to the cash dividend paid on an outstanding share of the Corporation’s common stock. Dividend Equivalents shall be credited to Stock Units as if each Stock Unit were an outstanding share of the Corporation’s common stock, except that Dividend Equivalents shall also be credited to fractional Stock Units.

(n) “Plan” means the Clearwater Paper Corporation Deferred Compensation Plan for Directors.

(o) “Separation from Service” means termination of a Director’s service as a non-employee member of the Board consistent with Code Section 409A and the regulations promulgated thereunder. The Plan is intended to be a Plan provided to directors, and in accordance with applicable regulations, a Director shall be treated as having Separation from Service for purposes of this Plan on the later of the date that the Director ceases to serve on the Board of Directors of the Corporation or an Affiliate and the Director is not an independent contractor to the Corporation or an Affiliate. Continued service as an employee of the Corporation or an Affiliate shall not affect whether a Director has incurred a Separation from Service under this Plan.

(p) “Stock Units” means the deferred portion of Director’s Fees, which is converted into units denominated in shares of the Corporation’s common stock, and Deferred Equity-Based Awards credited as units denominated in shares of the Corporation’s common stock.

(q) “Value” means the closing price of the Corporation’s common stock as reported in the New York Stock Exchange, Inc., composite transactions reports for the Valuation Date.

(r) “Valuation Date” means, for the purpose of Section 6 or 7, the date on which Director’s Fees or Dividend Equivalents are converted into Stock Units pursuant to Section 6 or 7 and, for purposes of Section 8, the last trading day of the month preceding the month in which Stock Units are converted into cash for purposes of Section 8.

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(s) “Year” shall mean the calendar year.

3. ELIGIBILITY

Each Director who receives Director’s Fees for service on the Board of Directors shall be eligible to participate in the Plan. A Director who receives a Deferred Equity-Based Award credited under the Plan shall participate in the Plan.

4. PARTICIPATION FOR DIRECTOR’S FEES.

In order to participate in the Plan with respect to Director’s Fees for a particular Year, a Director must file a deferral election with the Secretary of the Corporation prior to January 1 of such Year; provided, however, that in the case of a newly elected or appointed Director an election to participate shall be effective for the Year in which the Director is first elected or appointed if it is filed no later than thirty days following the date of the Director’s election or appointment to the Board. Any initial election filed by a newly elected or appointed Director shall apply only to Director’s Fees earned after the effective date of the election. A new Director who does not elect to make deferrals of Director’s Fees during the initial thirty-day election period may not later elect to make deferrals of Director’s Fees for the calendar year of his or her initial eligibility. If a payment of Director’s Fees (such as annual retainer fees or fees for serving as Chairman of a Committee) are due for services performed over a period of time which includes the period both before and the period after the date of the election, the election will apply to an amount equal to the total amount of the Director’s Fee paid for such performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period.

5. DEFERRAL ELECTION.

A Director who elects to participate in the deferral of Director’s Fees under the Plan shall file a deferral election on a form, which shall indicate:

(a) The amount or percentage of Director’s Fees that such Director elects to defer pursuant to the terms of the Plan. This election shall apply to amounts deferred under the Plan until modified by the Director. The Director shall notify the Secretary of the Corporation in writing of any such modification, which shall apply solely to amounts deferred with respect to Years following the Year in which the modification is made;

(b) The Year in which payment of the Director’s Deferred Compensation Account and/or Stock Units attributable to the Director’s deferral shall commence; provided however, that payments shall commence no later than the Year following the Year in which the Director attains age 72 and, in the case of Stock Unit payments, to the extent that the Committee reasonably determines that earlier payment would result in a violation of Federal securities laws, payment shall be made no earlier than six months after the last date on which Director’s Fees have been converted into Stock Units on behalf of the Director (except in the case of payments made following the Director’s death, Disability or Separation from Service);

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(c) Whether the payment of such Director’s Deferred Compensation Account is to be made in a single lump sum or in a series of approximately equal installments over a period of years specified by the Director (but in no event more than fifteen years). For purposes of the Plan, installment payments shall be treated as a single distribution under Section 409A of the Code;

(d) Whether the percentage deferral election shall be effective only with respect to Director’s Fees paid for the Year in which the Director’s participation in the Plan is to commence as determined pursuant to Section 4 above or shall apply with respect to Director’s Fees paid for that Year and all subsequent Years until revoked or modified by the Director, it being intended that a Director shall have only one election in effect with respect to the Year during which payment is to commence and the form of the payment for all amounts deferred under the Plan. Changes to the Year of commencement and form of payment may be made only in accordance with the rules of Section 5(f), below. The Director shall notify the Secretary of the Corporation in writing of any such revocation or modification of a deferral election or permitted new election with respect to the time or form of payment, which elections shall apply solely to amounts deferred with respect to Years following the Year in which the revocation, modification or new payment election is made; and

(e) The percentage of the Director’s Fees deferred pursuant to the election, which is to be converted into Stock Units. This election shall apply to the Year in which the Director’s participation in the Plan commences and to all subsequent Years until modified by the Director. The Director shall notify the Secretary of the Corporation in writing of any such modification, which shall apply solely to amounts deferred with respect to years following the Year in which the modification is made.

(f) Notwithstanding any provision herein to the contrary, a Director or former Director may revoke a previous election and make a new election as to the time and form of distribution under the Plan. Such new election shall take effect 12 months after it is filed with the Secretary of the Corporation and shall apply only to that portion of the Director’s or former Director’s Deferred Compensation Account and/or Stock Units scheduled to be paid more than 12 months after the date the election is filed with the Secretary of the Corporation; provided, however, that the newly scheduled distribution date must be at least 5 years later than the originally scheduled distribution date.

6. TREATMENT OF DEFERRED ACCOUNTS.

(a) Upon receipt of a duly filed deferral election, the Corporation shall establish a Deferred Compensation Account to which shall be credited an amount equal to that portion of the Director’s Fees which would have been payable currently to the Director but for the terms of the deferral election and which is not converted into Stock Units. If the deferral election includes an election to convert a percentage of the Director’s Fees deferred pursuant to the election into Stock Units, the number of full and fractional Stock Units shall be determined by dividing the amount subject to such an election by the Value of the Corporation’s common stock on the Valuation Date.

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Director’s Fees shall be credited to Director’s Deferred Compensation Account or converted into Stock Units on a quarterly basis as follows:

(i) The deferred portion of one-fourth of the annual retainer fee (other than the portion to be credited to Stock Units) shall be credited to a Director’s Deferred Compensation Account as of the first day of each calendar quarter;

(ii) The deferred portion of the fee for any meeting of the Board or any committee thereof (other than the portion to be credited to Stock Units) shall be credited to a Director’s Deferred Compensation Account as of the first day of the month following the date of such meeting;

(iii) The deferred portion of one-fourth of the annual retainer fee which is to be credited as Stock Units shall be credited as Stock Units as of the first trading day of the calendar quarter; and

(iv) The deferred portion of the fees for any meetings of the Board or any committee thereof which are to be credited as Stock Units shall be accumulated in the Participant’s Deferred Compensation Account and credited as Stock Units on the first trading day of the next calendar quarter.

(b) Upon receipt of a Deferred Equity-Based Award by a Director, the Corporation shall convert the award or credit the Director with a number of full and fractional Stock Units as of the date of grant of the award or such other date as provided under the terms of the award.

7. TREATMENT OF DEFERRED COMPENSATION ACCOUNT AND STOCK UNITS DURING DEFERRAL PERIOD.

(a) Deferred Compensation Account. Interest shall be credited on the balance of each Director’s Deferred Compensation Account commencing with the date as of which any amount is credited to the Deferred Compensation Account and continuing up to the last day of the quarter preceding the month in which payment of the amounts deferred pursuant to the Plan is made. Such interest shall become a part of the Deferred Compensation Account and shall be paid at the same time or times as the balance of the Deferred Compensation Account. Such interest shall be credited at 120% of the long-term applicable federal rate, with quarterly compounding, as published under Section 1274(d) of the Code for the first month of the calendar quarter.

(b) Stock Units. Dividend Equivalents shall be credited with respect to each Stock Unit credited to a Director on each dividend record date. Such Dividend Equivalents shall themselves be converted into Stock Units as of the dividend payment by dividing the amount of the Dividend Equivalents by the Value of the Corporation’s Common Stock as of the dividend payment date. Dividend Equivalents shall be credited on Stock Units attributable to a deferral of Director’s Fees and, except as otherwise provided by the terms of a Deferred Equity-Based Award, Stock Units attributable to Deferred Equity-Based Awards.

(c) Effect of Certain Transactions. In the event that there occurs a dividend or other distribution of shares of the Corporation’s common stock (“Shares”), a dividend in the form of

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cash or other property that materially affects the fair market value of the Shares, a stock split, a reverse stock split, a split-up, a split-off, a spin-off, a combination or subdivision of Shares or other securities of the Corporation, an exchange of Shares for other securities of the Corporation, or a similar transaction or event that materially affects the fair market value of the Shares, the Committee, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall make appropriate adjustments in the number of each Director’s Stock Units determined as of the date of such occurrence.

8. FORM AND TIME OF PAYMENT OF DEFERRED COMPENSATION ACCOUNT.

Payment of a Director’s Deferred Compensation Account shall be made or commence to be made in cash prior to January 31 in each year in which a payment is to be made in accordance with the Director’s deferral election. Payment of a Director’s Stock Units attributable to a deferral of Director’s Fees shall also be made at such time except that, if the applicable January 31 occurs within the six-month period beginning on the last date on which Director’s Fees have been converted into Stock Units on behalf of the Director and to the extent the Committee reasonably determines that earlier payment would result in a violation of Federal securities laws, then payment of the Director’s Stock Units shall be made on the last day of the month in which such six-month period expires. Notwithstanding the previous sentence, Stock Unit payments shall be made following the Director’s death, Disability or the date the Director Separates from Service, without regard to whether such six- month period has expired. A Director shall continue to be credited with Dividend Equivalents during any such delay in payment. For the purpose of payment, Stock Units attributable to deferred Director’s Fees shall be converted to cash based on the Value of the Corporation’s common stock on the applicable Valuation Date.

In the case of a Director who has both a Deferred Compensation Account and Stock Units, if a partial distribution of a deferred portion of Director’s Fees is to be made and if the Director’s Stock Units are immediately payable in accordance with the previous paragraph, payment shall be made partially from the Director’s Deferred Compensation Account and partially from Stock Units, in proportion to the relative size of the Deferred Compensation Account and the Stock Units. If the Director’s Stock Units are not immediately payable in accordance with the previous paragraph, the partial payment shall be made entirely from the Director’s Deferred Compensation Account.

Except as otherwise provided by the terms of a Deferred Equity-Based Award, payment of a Director’s Stock Units attributable to Deferred Equity-Based Awards shall be made in a single lump sum not later than the last day of the first full month beginning after the date of the Director’s Separation from Service, and Stock Units attributable to Deferred Equity-Based Awards shall be converted to cash based on the Value of the Corporation’s common stock on the applicable Valuation Date.

Notwithstanding any other provision of the Plan to the contrary:

(a) No distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in Section 409A(a)(3) of the Code and regulations promulgated thereunder; and

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(b) To the extent Code Section 409A(a)(2)(B), which applies to certain “specified employees,” is applicable to distributions to Directors under this Plan, no payment shall be made by reason of a Separation of Service before the date which, is six (6) months and one day following the Director’s Separation of Service or the Director’s death, if earlier. Any payments which would otherwise have been payable to a Director during the period of delay shall be made in a lump sum following the end of such delay. A Director’s Accounts shall continue to be credited with interest and Dividend Equivalents during the period of such delay.

9. EFFECT OF DEATH OF PARTICIPANT.

Upon the death of a participating Director, all amounts, if any, remaining in his or her Deferred Compensation Account and all Stock Units shall be distributed to the Beneficiary designated by the Director. Such distribution with respect to deferred Director’s Fees shall be made at the time or times specified in the Director’s deferral election. If the designated Beneficiary does not survive the Director or dies before receiving payment in full of the Director’s Deferred Compensation Account and Stock Units, payment shall be made to the estate of the last to die of the Director or the designated Beneficiary.

10. PARTICIPANT’S RIGHTS UNSECURED.

The interest under the Plan of any participating Director and such Director’s right to receive a distribution of his or her Deferred Compensation Account and Stock Units shall be an unsecured claim against the general assets of the Corporation. The Deferred Compensation Account and Stock Units shall be bookkeeping entries only and no Director shall have an interest in or claim against any specific asset of the Corporation pursuant to the Plan.

11. STATEMENT OF DEFERRED COMPENSATION ACCOUNT AND STOCK UNITS.

The Secretary of the Corporation shall provide an annual statement of each participating Director’s Deferred Compensation Account and Stock Units as soon as practicable after the end of each calendar year.

12. NONASSIGNABILITY OF INTERESTS.

The interest and property rights of any Director under the Plan shall not be subject to option nor be assignable either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any act in violation of this Section 12 shall be void.

13. ADMINISTRATION OF THE PLAN.

The Plan shall be administered by the Committee. In addition to the powers and duties otherwise set forth in the Plan, the Committee shall have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan and to take any and all necessary action in connection therewith. The Committee’s interpretation and construction of the Plan shall be conclusive and binding on all persons.

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Within 30 days after a Change of Control (as defined in Section 16), the Committee shall appoint an independent committee consisting of at least three (3) current (as of the effective date of the Change of Control) or former Corporation officers and directors, which shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan.

14. AMENDMENT OR TERMINATION OF THE PLAN.

(a) The Board may amend, suspend or terminate the Plan at any time. The foregoing notwithstanding, the Plan may not be amended (including any amendment to this Section 14) or terminated by the Board if such amendment or termination would alter the provisions of this Section 14 or adversely affect or impair the Director’s rights to receive payment with respect to the Director’s Deferred Compensation Account or Stock Units.

(b) Except as provided in Section 14(c) or as otherwise permitted under Section 409A of the Code, in the event of termination of the Plan, the Directors’ Deferred Compensation Accounts and Stock Units may, in the Board’s discretion, be distributed within the period beginning twelve months after the date the Plan was terminated and ending twenty-four months after the date the Plan was terminated, or pursuant to Section 8, if earlier. If the Plan is terminated and Deferred Compensation Accounts and Stock Units are distributed, the Board shall terminate all account balance non-qualified deferred compensation plans with respect to all Directors and shall not adopt a new account balance non-qualified deferred compensation plan for at least three years after the date the Plan was terminated. A termination and liquidation of the Plan under this Section 14(b) shall be made only in compliance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(c).

(c) The Board may terminate the Plan upon a corporate dissolution of the Corporation that is taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), provided that the Directors’ Deferred Compensation Accounts and Stock Units are distributed and included in the gross income of the Directors by the latest of (i) the Year in which the Plan terminates or (ii) the first Year in which payment of the Deferred Compensation Accounts and Stock Units is administratively practicable.

15. SUCCESSORS AND ASSIGNS.

The Plan shall be binding upon the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.

16. CHANGE OF CONTROL.

For purposes of the Plan, “Change of Control” shall mean

(a) Upon consummation of a merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such Business Combination,

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(i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of the Corporation (the “Outstanding Common Stock”) and the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

(ii) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(iii) at least a majority of the members of the board of directors or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(b) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the date of the Distribution whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

(c) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then Outstanding Common Stock or (ii) the combined voting power of the Outstanding Voting Securities; provided, however, that the following acquisitions

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shall not be deemed to be covered by this paragraph (c): (A) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation, (B) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or (C) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of paragraph (a) of this Section; or

(d) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

(e) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

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